Harvest Sherwood: $4B Food Distributor's Antitrust Litigation Strategy

Harvest Sherwood Food Distributors, the largest independent wholesale food distributor in the United States with $4 billion in annual revenue, filed for chapter 11 bankruptcy protection on May 5, 2025, in the U.S. Bankruptcy Court for the Northern District of Texas. The filing occurred nearly a month after the Detroit-based company completed a shutdown that eliminated 1,500 jobs across multiple states.

The shutdown ended an operating history of over 55 years in the food distribution industry. The filing followed the loss of its largest customer, Sprouts Farmers Market, a SEAFAX credit rating downgrade that triggered vendor liquidity pressure, and the failure of strategic alternatives. Thirteen affiliated entities, including SFD Transportation, also filed chapter 11 petitions, with up to $559 million in debt and estimated liabilities between $323.5 million and $558.5 million. Unlike most chapter 11 filings seeking operational restructuring, Harvest Sherwood's case centers on monetizing litigation assets—including approximately $1.09 billion in antitrust claims against over 28 defendants across pork, chicken, beef, and turkey producer categories—through a court-supervised wind-down process.

Court	U.S. Bankruptcy Court, Northern District of Texas
Case Number	25-80109
Judge	Hon. Stacey G. C. Jernigan
Petition Date	May 5, 2025
Debtor(s)	Harvest Sherwood Food Distributors, Inc. (affiliated debtors: 12 entities (including SFD Transportation Corp.))
Operations Status	Ceased April 21, 2025
Employees Terminated	~1,500
Estimated Liabilities	$323.5-$558.5 million
Prepetition ABL Facility	$79.1 million (JPMorgan Chase)
DIP Facility	$105 million (Roll-up + New Money)
Lead Counsel	Sidley Austin LLP
Financial Advisor	Meru, LLC
Claims Agent	Epiq
Key Litigation Assets	~$1.09 billion antitrust claims (28+ defendants)

Business Operations and Corporate History

Harvest Sherwood was formed in 2017 through the merger of two family-owned regional distributors: Sherwood Food Distributors (founded 1969 in Detroit) and Harvest Food Distributors (founded 1989 in California). Sherwood Food Distributors was founded by Alex Karp and Earl Ishbia as Regal Packing Company, changing its name in 1987 and ultimately growing to service 8,000 customers including retailers, wholesalers, institutional accounts, and cruise lines. Earl Ishbia is an uncle to Mat Ishbia, the billionaire chairman and CEO of United Wholesale Mortgage. Harvest Food Distributors was founded by Frank Leavy along with sons Jay, Kevin, and Dennis, initially operating distribution centers in Phoenix and San Diego before expanding to partner with more than 6,000 customers. The company focused on providing independent food companies without self-distribution scale access to national and regional protein brands they couldn't source directly. The 2017 merger created a nationwide protein and perishable food distribution network with combined capabilities, serving over 6,000 customers through 14 distribution centers across 13 states.

Prior to shutdown, Harvest Sherwood shipped over 20 million pounds of food weekly through a fleet of 250+ trucks, distributing beef, pork, poultry, seafood, deli items, and bakery products to retailers and foodservice operators. The company specialized in store perimeter products in fresh departments.

Major suppliers included Trident Seafoods, Chicken of the Sea, Ocean Beauty Seafoods, Pacific Seafoods, and AquaStar. The company maintained an industrial footprint of approximately 1.3 million square feet across 15 properties in 10 states, with supplier relationships averaging 25+ years.

Path to Filing

The filing followed months of customer concentration risk, credit deterioration, and a failed strategic process. At the center of the dispute was Sprouts Farmers Market, Harvest Sherwood's largest customer. In December 2024, Sprouts communicated its intent to migrate to full self-distribution for product categories historically distributed by Harvest Sherwood. Despite executing a Memorandum of Understanding on December 26, 2024, no transition plan materialized, leaving Harvest Sherwood with significant inventory commitments and reduced revenue.

On January 27, 2025, SEAFAX downgraded Harvest Sherwood's credit rating from "Recommended" to "Cautionary." Within days, vendors placed the company on hold or demanded cash terms for shipments. The credit deterioration coincided with Sprouts' payment disruptions, creating liquidity pressure.

Beginning in June 2024—before the Sprouts dispute accelerated—Harvest Sherwood engaged financial and legal advisors to pursue strategic alternatives. Investment banker Houlihan Lokey contacted 63 potentially interested parties, with 45 executing non-disclosure agreements. Initial indications of interest ranged from $175-225 million for the distribution centers. However, following the credit downgrade and Sprouts decision, bids declined to $42-125 million, which management determined were materially below liquidation value.

Layoffs were distributed across multiple states: 273 employees in Maple Heights, Ohio; 255 roles in Michigan; 130 roles in South Florida; and 96 roles in Portland, Oregon. Employees remained on payroll and benefits through the April 21, 2025 shutdown date.

Industry Context

Sprouts' decision to transition away from third-party distribution occurred amid broader industry changes in food retail supply chains. According to Grocery Dive, Sprouts began sourcing fresh meat and seafood from its own distribution centers in Q3 2025. Supermarket News reported that Sprouts achieved full-year 2024 net sales of $7.7 billion (up 13% year-over-year), with Q4 net sales reaching $2 billion. Same-store sales growth of 7.6% for the full year and 11.5% in Q4 coincided with the move to bring distribution in-house.

The filing occurred amid consolidation pressure throughout food distribution. US Foods and Performance Food Group mutually terminated merger discussions in 2025, citing regulatory concerns. Following the failed merger, both companies accelerated acquisition activity (Sysco acquiring North Star Seafood, US Foods purchasing Cara Donna Provision Co.).

Chapter 11 Filing and Capital Structure

Thirteen affiliated entities filed for bankruptcy protection: Harvest Sherwood Food Distributors, Inc. (25-80109) and affiliated debtors Harvest Meat Company, Inc.; Sherwood Food Distributors, L.L.C.; Cascade Food Brokers, Inc.; Del Mar Acquisition Inc.; Del Mar Holding LLC; Hamilton Meat, LLC; LAMCP Capital, LLC; SFD Acquisition LLC; SFD Company LLC; SFD Transportation Corp.; Surfliner Holdings, Inc.; and Western Boxed Meats Distributors, Inc.

The company's secured debt consisted of an ABL Revolving Credit Facility with $79.1 million outstanding at petition, secured by a first-priority lien on substantially all assets. JPMorgan Chase Bank, N.A. served as agent for the prepetition secured lenders.

Major creditors include Burford Capital ($35 million), National Beef Packaging ($15.5 million), and Tyson Foods ($13 million). Additional significant trade creditors include MegaCorp Logistics ($3.25 million), Dutch Farms ($3.67 million), Nebraska Beef ($1.92 million), Navistar Financial ($1.87 million secured by 11 tractor-trucks), and Wholestone Farms ($820,000). The Official Committee of Unsecured Creditors estimates aggregate unsecured claims at approximately $311 million.

Working with Hilco Global, the company monetized substantially all inventory during the eight-week wind-down period preceding the bankruptcy filing, recovering $140 million on inventory with a face value cost of $154 million—achieving a 91% recovery rate. During the prepetition wind-down, the company also sold five distribution centers in Denver, Salt Lake City, Los Angeles, Kansas City, and Miami to strategic purchasers who assumed certain obligations and purchased inventory.

The Debtors secured a $105 million senior secured superpriority DIP facility from existing ABL Lenders:

The full roll-up of prepetition debt drew objections from multiple parties, including the U.S. Trustee, Sprouts, Capital Providers, and 1970 Group, Inc. $5 million was accessible upon interim approval, with the Final DIP Order entered June 27, 2025. The DIP financing required waiver of Debtors' rights under § 506(c) (surcharge), § 552(b) ("equities of the case"), and marshaling doctrine.

The Sprouts Adversary Proceeding

On May 8, 2025, the Debtors filed an adversary complaint (Case No. 25-08002) seeking $41.8 million plus punitive damages, asserting seven causes of action:

The Debtors alleged Sprouts drove them toward insolvency by withholding payments and demanding bifurcation. The complaint alleges that at the time Sprouts began bifurcating payments, it already owed Harvest approximately $55 million. The complaint further asserts Sprouts diverted funds needed by Harvest to service senior debt, made misrepresentations about intent to pay under the February 11 Agreement, and retained millions of dollars of goods while claiming "duress" to escape payment obligations.

Sprouts' position, as stated in SEC filings, is that it terminated its distribution agreement due to Harvest Sherwood's failure to pay Sprouts' vendors for products. Sprouts filed counterclaims in Delaware state court on March 6, 2025, before the Delaware action was stayed following the chapter 11 filing. Sprouts' motion to transfer venue to the Southern District of California was denied on July 1, 2025.

Antitrust Litigation and Settlements

The Debtors' most significant remaining assets are claims in antitrust proceedings against over 28 defendants across pork, chicken, beef, and turkey producers, with estimated damages of approximately $1.09 billion (excluding potential treble damages under antitrust law):

The Debtors retained Cadwalader, Wickersham & Taft LLP as special counsel for the antitrust portfolio under a contingency fee structure:

The JBS settlement resolved claims alleging JBS conspired to fix pork prices. Key terms included JBS cooperation in prosecuting claims against remaining defendants, dismissal with prejudice of claims against JBS, and JBS releasing over $1.7 million in prepetition claims against the Debtors. The Pilgrim's Pride settlement resolved claims in the Broiler Chicken Antitrust Litigation alleging conspiracy to fix broiler chicken prices beginning at least January 2008.

Other contested matters included BMO Bank N.A.'s motion for relief from the automatic stay (which was granted) and Miceli Dairy Products Co.'s assertion of an Ohio law lien on certain products.

A separate dispute involved Blakemore Investments LLC and Milwaukee Investments LP (collectively "Burford"), which had provided $35 million in prepetition funding for antitrust litigation. Burford asserted a senior interest in antitrust litigation proceeds, claiming the Capital Provision Agreement subordinated the Debtors' interests and that proceeds were held in trust for Burford's benefit. The Debtors disputed these claims, arguing the agreement never assigned any interest in the assets or proceeds, Burford was never granted security interests or liens, and Burford was aware the prepetition secured parties held liens on such assets. On November 13, 2025, Sidley Austin secured dismissal of Burford's adversary proceeding, preserving the first priority lien on antitrust proceeds granted under the postpetition financing.

Claims Trading and Professional Retention

The case has attracted claims trading activity. TRC Master Fund LLC has acquired claims from multiple trade creditors including MegaCorp Logistics, Dutch Farms, Nebraska Beef, and others. Hain Capital Investors Master Fund and WAUCOBA INVESTORS, LLC have also acquired positions.

The Debtors' professional team includes Sidley Austin LLP (bankruptcy counsel), Meru, LLC (financial advisor), and Hilco (restructuring advisor/CRO services). The Official Committee of Unsecured Creditors, appointed by March 12, 2025, retained McDermott Will & Emery LLP as counsel and Province, LLC as financial advisor. An ad hoc committee of approximately 25 unsecured creditors holding $27 million in claims had formed prepetition. Professional fees totaled approximately $32 million in the first two months of the case, reflecting the scope of the wind-down and litigation prosecution. Ripple effects across the company's 650+ supplier network and 6,000+ customers show supply chain disruption from the shutdown.

Case Status and Outlook

As of December 2025, the Debtors are in wind-down mode with all distribution operations ceased. Primary activities focus on prosecution of remaining antitrust claims against over 25 defendants, collection of remaining accounts receivable (approximately $87 million at petition), administration of settlement proceeds, and claims reconciliation following the August 21, 2025 general bar date.

Under the DIP financing structure, settlement proceeds are directed first to pay down the $105 million DIP Facility. Following DIP repayment, general unsecured creditors would be the primary beneficiaries of remaining litigation assets. With $44.6 million in antitrust settlements already achieved against estimated $1.09 billion in claims across 28+ defendants, additional recoveries are pending, and timeline and creditor distributions will follow resolution of remaining litigation and claims administration.

Frequently Asked Questions

Who is the claims agent for Harvest Sherwood?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent for the Harvest Sherwood bankruptcy cases (Case No. 25-80109 in the Northern District of Texas). The case is in a wind-down phase with antitrust litigation ongoing against 28+ defendants. Creditors with questions about claims should contact Epiq.

What caused Harvest Sherwood's bankruptcy?

Multiple factors converged: Sprouts Farmers Market, the company's largest customer, transitioned to self-distribution and withheld approximately $42 million in payments; SEAFAX downgraded the company's credit rating to "Cautionary," triggering vendor holds and cash-only terms; and the failed strategic alternatives process yielded bids materially below liquidation value. The combined liquidity pressure preceded the shutdown and filing.

How many employees lost their jobs?

Approximately 1,500 employees were terminated as part of the shutdown, distributed across multiple states: 273 in Maple Heights, Ohio; 255 in Michigan; 130 in South Florida; and 96 in Portland, Oregon. Employees remained on payroll and benefits through April 21, 2025.

What are the antitrust claims worth?

The Debtors estimate approximately $1.09 billion in antitrust damages across claims against over 28 defendants in pork, chicken, beef, and turkey producer categories. This excludes potential treble damages available under antitrust law. Two settlements totaling $44.6 million have been achieved with JBS ($13.3 million) and Pilgrim's Pride ($31.3 million).

What happened to Burford Capital's claims?

Burford Capital had provided $35 million in prepetition funding for antitrust litigation and asserted senior priority over litigation proceeds. On November 13, 2025, the court dismissed Burford's adversary proceeding, preserving the DIP Lenders' first priority lien on antitrust proceeds.

Is Sprouts liable for the bankruptcy?

The Debtors filed an adversary proceeding seeking $41.8 million plus punitive damages from Sprouts, alleging fraudulent transfer, breach of contract, fraud, and unjust enrichment. Sprouts disputes these claims and filed counterclaims. The litigation remains pending; Sprouts' motion to transfer venue was denied in July 2025.

What is the DIP financing structure?

The Debtors secured a $105 million senior secured superpriority DIP facility consisting of $25.9 million in new money and a $79.1 million roll-up of prepetition ABL obligations. The facility matures April 30, 2027.

How much did creditors recover from the inventory liquidation?

Working with Hilco Global, the company recovered approximately $140 million on inventory with face value cost of $154 million—a 91% recovery rate. Five distribution centers were also sold to strategic purchasers during the prepetition wind-down.

Why is the case in Texas rather than Michigan or California?

The lead debtor is incorporated in Texas. Despite Sprouts' motion to transfer venue to the Southern District of California, the court denied the request in July 2025.

What happens to remaining antitrust litigation?

Active claims remain against Tyson Foods, Wayne-Sanderson Farms, Agri Stats, and other defendants across chicken, pork, beef, and turkey categories. Cadwalader, Wickersham & Taft LLP serves as special counsel on contingency fee arrangements. Settlement proceeds first repay the DIP facility before benefiting unsecured creditors.

When will the chapter 11 case conclude?

Exclusivity periods for plan filing extend through January 30, 2026, with solicitation exclusivity through March 31, 2026. Case resolution will follow antitrust litigation outcomes, Sprouts adversary proceeding resolution, and claims administration.

How does the company's history relate to the case?

Harvest Sherwood was formed in 2017 through the merger of Sherwood Food Distributors (founded 1969 in Detroit) and Harvest Food Distributors (founded 1989 in California). The merger created the largest independent wholesale food distributor in the U.S. with $4 billion in revenue, and the combined entity inherited customer concentration risk that became acute when Sprouts, its largest customer, moved to self-distribution.

Who are the major unsecured creditors?

Major unsecured creditors include National Beef Packaging ($15.5 million), Tyson Foods ($13 million), MegaCorp Logistics ($3.25 million), Dutch Farms ($3.67 million), Nebraska Beef ($1.92 million), and Wholestone Farms ($820,000). The Official Committee of Unsecured Creditors estimates aggregate unsecured claims at approximately $311 million.

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