The sixth-generation operation entered chapter 11 citing an acute liquidity crisis driven by over-leverage, the working-capital demands of the 2025 crop cycle, and competing positions taken by its two largest secured lenders, The Prudential Insurance Company of America and BMO. On July 8, 2026, the court authorizing up to $50 million from Sandton Capital Solutions Master Fund VI, LP, and separately of substantially all assets — but did not approve the previously proposed , leaving the identity of the eventual stalking horse to a separate designation motion. The debtors filed that motion on July 15, again naming , with a designation hearing set for July 23.
U.S. Bankruptcy Court, Eastern District of Washington
Case Number
26-01136
Petition Date
June 4, 2026
Judge
Hon. Frederick P. Corbit
Funded Debt
Roughly $244 million across seven prepetition facilities
DIP Facility
Sandton Capital Solutions Master Fund VI, LP — final order entered July 8, 2026 for up to $50M, senior secured and superpriority
Sale Process
Bid procedures approved July 8, 2026 for a § 363 sale; Heritage Orchard Alliance designation motion filed July 15, hearing set for July 23
Case Snapshot
Vertically Integrated Orchard Platform and Asset Base
The debtors are a vertically integrated grower, packer, marketer, and shipper of apples, cherries, and pears, operated by the Gebbers family in its sixth generation of leadership from a base in Brewster, Washington, with roots in the area dating back to 1900. Cass Gebbers leads the family operation, with Daniel Gebbers serving as CEO of the lead debtor BHPO. The company employed approximately 3,742 people as of the petition date, at the peak of a labor-intensive, perishable crop cycle.
The asset base spans roughly 8,500 acres of orchard land — about 6,816 acres of apple orchards, 1,581 acres of cherry orchards, and 1,659 acres of pre-productive plantings — planted across more than 25 varieties, including proprietary fruit marketed as SugarBee, Rockit, and Lucy; Brewster Heights is the developer of the SugarBee apple. The company sold approximately 17.3 million boxes of fruit in fiscal year 2024, split between 13.3 million boxes of apples and 3.4 million boxes of cherries, against packing capacity of roughly 287,000 apple bins and 2.4 million cherry boxes a year.
The corporate structure concentrates operations in BHPO, a Nevada limited partnership whose sole general partner is Gebbers Orchards, Inc., a Washington corporation, with all other debtors wholly owned by BHPO. Orchard land-holding entities include P&G Orchards, LLC; Eastco, LLC; Northco, LLC; Westco Orchards, LLC; and REPO, LLC, with the balance of the debtor group made up of operating and storage entities such as D&E Storage, LLC and Westco Sales, Inc. Two affiliates sit outside the bankruptcy: Chelan Fresh, the grower-owned sales and marketing arm that represents the Gebbers fruit, and Gebbers Farm Services, LLC, a centralized cost-sharing vehicle for the debtors and affiliated farms.
Prudential and BMO Defaults and the Road to Filing
The debtors attribute the filing to an acute liquidity crisis layered on top of sector-wide pressure in the Washington tree-fruit industry. The first-day declaration cites rising input costs, trade challenges, labor concerns, and infrastructure issues, and notes that high labor costs consumed 99% of the return per bin in 2023 as the state's concentration of apple and cherry production declined while input costs rose across the Washington tree-fruit sector. Washington agricultural labor has been a persistent pressure point for the company: Gebbers Farms previously fired approximately 550 workers following an immigration audit in Brewster, and in 2021 the Washington Department of Labor & Industries fined the company more than $2 million after inspections found 24 egregious willful violations tied to unsafe worker housing and transportation during the pandemic, including two farmworker deaths from COVID-19. The settlement required roughly $1.4 million in worker-housing capital improvements.
The financial breakdown ran through the company's two senior lenders in sequence. The debtors triggered financial covenant defaults under the Prudential Loan Agreement in late 2024, followed by defaults under the BMO syndicated and bilateral facilities in May 2025. After refinancing negotiations failed, the company entered short-term forbearance agreements with both BMO and Prudential that were extended through August 31, 2025 on the condition that the debtors pursue an expedited sale or restructuring; the lenders then agreed to forbear further until roughly November 15, 2025 while restructuring proposals were explored.
The immediate trigger was cash collateral. By late March 2026, BMO informed the debtors that it would permit no further use of cash collateral even as crop-season operating expenses escalated. To avoid an immediate receivership or an early-April 2026 filing, the debtors secured an $8 million crop loan from Backstop Ag Capital that funded operations through April and delayed a contemplated chapter 11 filing until May, with the debtors preparing for a May 1 filing on a limited budget; the loan also required the appointment of an independent director acceptable to Prudential.
Capital Structure and the Prudential–BMO Split
As of the petition date the debtors carried roughly $244 million of funded debt across seven prepetition instruments, dominated by a single Prudential term facility and two cross-collateralized BMO loans.
Facility
Lender / Agent
Outstanding
Status
Prudential Loan (May 28, 2020)
The Prudential Insurance Company of America
~$162,340,000
Secured
BMO Syndicated Loan (June 10, 2021)
BMO, as Syndicated Agent, and Syndicated Lenders
~$56,270,441
Secured
Crop Loan (March 25, 2026)
Backstop Ag Capital
$8,000,000
Secured (2026 crop)
BMO Bilateral Loan (Aug. 29, 2022)
BMO, as Bilateral Lender
~$6,569,000
Secured
Apple House Note (Dec. 1, 2019)
Apple House
~$6,000,000
Unsecured
NCNB Loan (June 27, 2013)
North Cascades National Bank
~$700,912
Secured
Happy Valley Term Loan (May 19, 2022)
Happy Valley USA Credit III, LLC
~$4,200,000
Secured (Westco Orchards, guaranteed by BHPO)
The Prudential Loan Agreement, dated May 28, 2020, carried approximately $162.34 million outstanding and is secured by real property, certain personal property, and an assignment of leases and rents. It has been modified repeatedly, most recently through a Fourth Amended and Restated Loan Modification and Forbearance Agreement dated March 27, 2026, and the interim DIP order later stipulated that the aggregate Prudential prepetition obligations are not less than $162,340,000 plus accrued interest, fees, and expenses.
The BMO exposure is split across two cross-defaulted, cross-collateralized facilities. The BMO Syndicated Loan Agreement of June 10, 2021 had roughly $56.27 million outstanding and is secured by substantially all personal property plus liens on identified real property, including the King Blossom, Hunt Ranch & Asmussen, Gamble Lumber Company Town Mill Site, Snyder Flats, and MC-Guelich properties. The BMO Bilateral Loan Agreement of August 29, 2022, with about $6.57 million outstanding, is secured by land and fixtures at the King Blossom property in Brewster. Both BMO facilities were amended by forbearance agreements dated September 10, 2025.
The remaining instruments complete the capital stack. The Backstop Ag Capital crop loan holds a first-priority lien in the 2026 orchard crop, ranks pari passu with other 2026 crop loans, and is subject to a subordination agreement with both Prudential and BMO. The North Cascades National Bank loan from June 27, 2013 had roughly $700,912 outstanding with a 2033 maturity. The Happy Valley Term Loan from May 19, 2022 — a $4.2 million interest-only secured loan to debtor Westco Orchards, LLC from Happy Valley USA Credit III, LLC, used to purchase real estate in Okanogan County, Washington, and guaranteed by BHPO — had approximately $4.2 million outstanding with a May 2027 maturity. The approximately $6 million Apple House Note — converted from accounts payable in December 2019 and amortized over 15 years — is unsecured and subordinated to all other debt. The competing positions of Prudential and BMO over their respective collateral packages are cited as a core driver of the liquidity squeeze.
Sandton DIP Financing and the Final Order
The debtors obtained postpetition financing from Sandton Capital Solutions Master Fund VI, LP on a senior secured, superpriority basis. The court entered an interim DIP and cash collateral order on June 10–11, 2026 authorizing borrowings of not more than $20 million, and after a July 1 hearing was continued a week for further negotiation, the court entered a final DIP financing order on July 8, 2026 authorizing the full facility in an aggregate funded principal amount of up to $50 million. The stated purpose remains funding the 2026 crop harvest, preserving perishable inventory, paying employee wages, and meeting other critical operating expenses through the crop season.
The final order grants Sandton DIP liens and superpriority administrative claims, requires the debtors to deliver weekly variance reports, and treats an aggregate trailing rolling disbursement variance greater than 20% against the approved budget as a DIP termination event. It sets July 9, 2026 as the deadline for a final adequate-protection order and preserves the interim order's sale and restructuring milestones: a plan of reorganization or a motion to sell substantially all assets within 90 days of the June 4 petition date, and an order confirming a plan or approving a sale within 150 days of the petition date. The order states that objections to its entry were withdrawn, resolved, or overruled, with any objections not otherwise resolved denied and overruled.
Prepetition secured lenders Prudential and BMO received replacement liens and section 507(b) superpriority claims junior to the DIP superpriority claims, and the order preserves BMO's specified adequate-protection payments, including the $50,000 monthly equipment-depreciation payments that began July 1, 2026. The Official Committee of Unsecured Creditors filed a limited objection to the DIP motion ahead of the hearing, seeking more liquidity, narrower collateral grants and lien waivers, a longer challenge period, a larger wind-down reserve, changes to the Backstop crop-loan repayment terms and the BMO crop-proceeds sweep, and a 30-day extension of the sale/plan milestones; the entered final order is the controlling disposition of those requests. BMO had separately filed a limited opposition objecting to priming of its liens in the 2025 crop collateral, accounts receivable, marketing and grower agreements, the North Star Road property, and equipment without its consent, and to any implied surcharge, carve-out, or subordination of its section 507(b) rights.
The prepetition Backstop crop loan functions as the bridge into the Sandton facility. On day one the debtors also sought authority to continue an integrated cash-management system of roughly 18 bank accounts across five banks and to pay prepetition employee wages and benefits for employees at the peak of the 2026 crop cycle.
Heritage Orchard Alliance Designation Motion and Sale Timeline
The sale path predates the petition. The debtors retained Capstone Capital Markets LLC as investment banker in June 2025 to run a formal marketing process, which contacted more than 80 parties, produced 49 nondisclosure agreements, and yielded seven letters of intent. The board approved a letter of intent for a sale of substantially all assets under section 363 with a bidder the debtors proposed to designate as stalking horse.
The buyer's identity shifted across the filings. The first-day declaration named the letter-of-intent counterparty as U.S. Farming Realty Trust III, LP, and the transaction was publicly announced as a sale to Legendary Fruit Company. The later stalking horse term sheet and form asset purchase agreement identify the proposed contracting buyer as Heritage Orchard Alliance LLC, a Delaware acquisition vehicle sponsored by International Farming Management Company LLC, with U.S. Farming Realty Trust III appearing in the term sheet's exclusivity provisions as part of the same International Farming platform, a combination trade press described as one of the largest U.S. fruit companies. The proposed bid was valued at approximately $231.3 million — $75 million in cash at closing plus assumed liabilities, including the Prudential term loan at $155,580,788.20 and the North Cascades Bank term loan at $718,958.
On July 8, 2026, the court approved bid procedures for a sale of substantially all assets but did not approve the Heritage Orchard Alliance stalking-horse agreement or its proposed bid protections. The debtors may still select a stalking horse and seek separate approval of its purchase agreement and break-up fee, expense reimbursement, and overbid terms under a new schedule: a July 15 deadline to file a stalking-horse-designation motion, a July 21 objection deadline, a July 23 hearing (with a July 27 backup date), a July 31 cure-notice deadline, an August 14 cure-objection deadline, an August 19 bid deadline, an August 24 auction, an August 28 sale-objection deadline, and a September 1 sale hearing. This schedule replaces the debtors' originally proposed August 7 bid deadline and August 12 auction, which had been built around the Heritage Orchard Alliance bid as an already-approved stalking horse.
On July 15, 2026, the debtors moved to designate Heritage Orchard Alliance LLC as the stalking-horse bidder — or another newly formed acquisition vehicle designated by International Farming Management Company LLC or its affiliates — under a revised asset purchase agreement carrying the same $231.3 million purchase price, subject to working-capital and other contractual adjustments, with cash proceeds required to repay the Sandton DIP facility in full at closing. The motion cut the requested break-up fee from the earlier 3% ($6,939,000) figure to 2% of the purchase price, added an initial auction overbid requirement equal to the purchase price plus the bid protections plus $1 million, and disclosed that the proposed APA still carries diligence and financing contingencies, including unresolved feasibility issues around confirming adequate cash at closing. The court set the designation motion for hearing on July 23, 2026; as of July 17, 2026, no order approving the buyer, the APA, or its bid protections had been entered.
A competing Okanogan-region grower, Borton & Sons, signaled at the June 9 interim DIP hearing that it intended to challenge the stalking horse at auction, the first named alternative bidder to emerge in the sale process. Restructuring leadership for the process includes Peter Richter as chief restructuring officer alongside Capstone.
BMO and Wilbur-Ellis Object to Sale Terms
BMO and Wilbur-Ellis both objected to the bid procedures motion before the July 8 hearing, and the objections help explain why the court approved a general sale process rather than the Heritage Orchard Alliance agreement as proposed. BMO Bank N.A. filed a response and reservation of rights to the bid procedures motion and stalking horse term sheet, calling the proposed procedures "fatally flawed" and "defective on its face" because the term sheet left BMO's treatment "to be determined," proposed to sell BMO's collateral without specifying payment to BMO, was vague on credit-bidding mechanics, and included nonconsensual third-party releases of Gebbers family insiders. BMO asked the court to set over the bid procedures motion unless the debtors produced a valid offer and term sheet addressing BMO's treatment and removing the third-party releases.
Wilbur-Ellis Company, LLC, a committee member and trade creditor, objected to the bid procedures on the ground that the $231.3 million stalking horse bid is "artificially and materially low" relative to the debtors' own March 2025 asset valuations, which it said implied an estate potentially worth more than $400 million. It challenged the $6,939,000 break-up fee as excessive because it is calculated on the full purchase price rather than the $75 million of committed cash, contending it should be capped at roughly $2.25 million plus reasonable expenses, and argued that the stalking horse's ability to assume existing loans — unavailable to other bidders — confers an unfair advantage. Wilbur-Ellis also called the timeline too fast, noting that the exclusivity provisions blocked substantive communication until July 1, 2026 and that approving procedures before the asset schedules and the section 341 meeting was premature. Wilbur-Ellis separately told trade press that the sale should pay all creditors.
The July 8 bid procedures order left the Heritage Orchard Alliance agreement unapproved and reset the sale schedule around a separate stalking-horse-designation motion, without resolving the specific pricing and term objections BMO and Wilbur-Ellis raised. The revised process gives the debtors until July 15 to designate a stalking horse — Heritage Orchard Alliance, Borton & Sons, or another bidder — and seek court approval of that bidder's break-up fee and other protections separately from the general sale procedures.
Unsecured Creditors' Committee and Case Professionals
The U.S. Trustee for the Eastern District of Washington appointed an Official Committee of Unsecured Creditors on June 16, 2026, with nine members: HR Spinner Corp.; Nutrien Ag Solutions; Wilbur-Ellis Company, LLC; Sierra Aeronautics, LLC; Chamberlin Agriculture; Whitley Fuel; Pacific Label; Northwest Wholesale, Inc.; and WAFLA.
The court approved the debtors' Key Employee Retention Plan on July 17, 2026 under sections 363(b) and 503(c)(3), covering 24 employees at a total cost of $1,123,137, with individual payments ranging from $11,877 to $329,713 and no participant treated as an insider under section 101(31). Awards are earned and payable on the closing of a sale, with certain participants eligible for milestone amounts tied to an executed asset purchase agreement or the filing of the schedules and statements of financial affairs, and the order grants amounts earned and payable under the plan administrative-expense priority under section 503(b)(1). The U.S. Trustee had objected to the retention plan motion and to several of the debtors' professional employment applications before the court's approval.
On July 1, 2026, the court approved the debtors' employment of Katten Muchin Rosenman, Bush Kornfeld, and VeroPeak, each effective as of the petition date and subject to further fee allowance under section 330, while preserving the U.S. Trustee's right to object within 30 days after the debtors file their schedules and statements of financial affairs, due no later than July 17, 2026. The same day, the court established interim compensation procedures authorizing estate professionals to draw 100% of costs and 80% of fees monthly, subject to a 10-day objection period, with formal fee applications due no more often than every 120 days.
Key Timeline
The following milestones track the case from the prepetition loan defaults through the proposed sale schedule, drawn from the First Day Declaration and subsequent filings.
Date
Event
May 28, 2020
Prudential Loan Agreement executed
June 10, 2021
BMO Syndicated Loan Agreement executed
Aug. 29, 2022
BMO Bilateral Loan Agreement executed
Late 2024
Covenant default triggered under Prudential Loan
May 2025
Covenant defaults triggered under BMO facilities
June 2025
Capstone retained; formal marketing process begins
Aug. 31, 2025
Initial BMO/Prudential forbearance period extended through this date
Sept. 10, 2025
BMO syndicated and bilateral forbearance agreements
~Nov. 15, 2025
Extended forbearance period to explore restructuring proposals
Late March 2026
BMO declines further cash collateral use
March 25, 2026
$8M crop loan from Backstop Ag Capital
March 27, 2026
Fourth Amended and Restated Prudential forbearance agreement
Interim DIP and cash collateral order entered; Stretto retained as claims agent
June 12, 2026
Bid procedures (asset sale) motion filed
June 16, 2026
Official Committee of Unsecured Creditors appointed (9 members)
June 17, 2026
Stalking horse term sheet filed
June 18, 2026
KERP and retention applications filed; Wilbur-Ellis bid objection filed
June 24, 2026
Form stalking horse APA and proposed final DIP order filed; U.S. Trustee objections filed
June 25, 2026
BMO limited DIP opposition filed
June 29, 2026
Frequently Asked Questions
Has a stalking horse buyer been approved for Brewster Heights Packing & Orchards?
Not yet. The stalking horse term sheet and form asset purchase agreement had named Heritage Orchard Alliance LLC, a Delaware acquisition vehicle sponsored by International Farming Management Company LLC, as the proposed contracting buyer — a deal publicly announced as a sale to Legendary Fruit Company, with the first-day declaration identifying U.S. Farming Realty Trust III, LP as the letter-of-intent counterparty — but the court's July 8 bid procedures order approved only a general sale process and left the Heritage Orchard Alliance agreement unapproved. On July 15, 2026 the debtors moved to designate Heritage Orchard Alliance LLC again as stalking horse under a revised APA carrying the same $231.3 million price but a reduced 2% break-up fee, with a designation hearing set for July 23, 2026, an August 24 auction, and a September 1 sale hearing under the current schedule.
Who is providing debtor-in-possession financing?
Sandton Capital Solutions Master Fund VI, LP is the DIP lender. The court entered a final DIP order on July 8, 2026 authorizing up to $50 million on a senior secured, superpriority basis to fund the 2026 harvest, subject to weekly variance reporting and milestones requiring a plan or sale motion within 90 days and a confirmation or sale order within 150 days of the petition date.
Who is the claims agent for Brewster Heights Packing & Orchards?
Stretto serves as the claims and noticing agent under an order entered in June 2026. The retention covers noticing and claims-register administration for the thirteen jointly administered debtors under lead case number 26-01136.
What caused the bankruptcy?
The debtors point to over-leverage, the working-capital demands of the 2025 crop cycle, and competing positions taken by senior lenders Prudential and BMO, against a backdrop of rising input costs and labor pressure in the Washington tree-fruit sector. Covenant defaults beginning in late 2024 led to successive forbearances and, ultimately, BMO's refusal to allow further use of cash collateral in March 2026.
Eastern District of Washington https://news.bloomberglaw.com/bankruptcy-law/brewster-heights-packing-orchards-files-for-chapter-11
announcing a voluntary restructuring https://www.globenewswire.com/news-release/2026/06/08/3308355/0/en/Brewster-Heights-Packing-Orchards-Commences-Voluntary-Chapter-11-Restructuring-Process.html
sixth generation of leadership https://gebbersfarms.com/historical-timeline/
roots in the area dating back to 1900 https://www.capitalpress.com/2016/04/14/gebbers-farms-growing-fruit-since-1900/
Daniel Gebbers serving as CEO https://theproducenews.com/brewster-heights-files-chapter-11-bankruptcy-protection
8,500 acres of orchard land https://www.capitalpress.com/2026/06/09/central-washington-fruit-giant-files-for-bankruptcy-selling-orchards/
proprietary fruit marketed as SugarBee, Rockit, and Lucy https://gebbersfarms.com/gebbers-farms-at-a-glance/
developer of the SugarBee apple https://fruitgrowersnews.com/news/brewster-heights-bankruptcy-specialty-crop-economy/
grower-owned sales and marketing arm https://chelanfresh.com/
input costs rose across the Washington tree-fruit sector https://www.thepacker.com/news/washington-tree-fruit-giant-files-chapter-11-input-costs-soar
fired approximately 550 workers following an immigration audit https://www.seattletimes.com/seattle-news/massive-firings-in-brewster-and-a-big-debate-about-illegal-immigration/
fined the company more than $2 million https://apnews.com/article/business-health-coronavirus-pandemic-washington-f7d593a05890679bb5929ddbe8fbd52f
publicly announced as a sale to Legendary Fruit Company https://www.prnewswire.com/news-releases/legendary-fruit-company-enters-letter-of-intent-with-gebbers-farms-302793004.html
one of the largest U.S. fruit companies https://www.fruitnet.com/fruitnet/legendary-fruit-buys-gebbers-farms-to-expand-apple-and-cherry-offer/271727.article
challenge the stalking horse at auction https://www.yoursourceone.com/columbia_basin/second-suitor-could-outbid-legendary-fruit-for-gebbers-farms-as-judge-approves-25m-lifeline-leading/article_35397a9f-5116-49a3-b5f4-74a89a8e7ab3.html
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.
BMO response and reservation of rights to bid procedures filed
July 1, 2026
Interim DIP authority extended and final DIP hearing continued to July 8; Katten, Bush Kornfeld, and VeroPeak retentions approved; interim fee procedures established
July 8, 2026
Final DIP order entered (up to $50M); bid procedures approved for general sale; Heritage Orchard Alliance stalking-horse agreement not approved
July 9, 2026
Milestone: final adequate protection order deadline