Hronis, Inc.'s chapter 11 turned on whether Conterra Agricultural Capital, the family produce company's dominant secured and DIP lender, could acquire the business it financed through a credit bid the official creditors' committee called a de facto foreclosure. Days before a scheduled evidentiary trial on that question, the Debtors, Conterra, and the Committee reached a Rule 9019 settlement confirming Conterra's right to credit bid its $110 million stalking horse for substantially all assets, dismissing the Committee's adversary proceeding against Conterra, and funding a carveout for general unsecured creditors. The court approved the settlement on June 18, 2026, and the June 24, 2026 auction produced a $122.2 million winning credit bid for Conterra on the remaining assets, plus $14.5 million across six individually sold ranches; the court approved the sale on June 30, 2026 and entered a final sale order on July 30, 2026.
Hronis and nine affiliated entities filed chapter 11 on March 6, 2026, in the U.S. Bankruptcy Court for the Eastern District of California, Fresno Division, listing both assets and liabilities in the $50 million to $100 million range. The ten-debtor filing covers a vertically integrated table grape and citrus operation that has farmed the San Joaquin Valley since 1945, shipping more than to major retailers and supermarket chains. The Debtors entered chapter 11 carrying approximately owed primarily to Conterra, after a series of adverse events beginning with a $12 million IRS audit in 2017, consecutive weather-damaged harvests, and a fall in red grape prices that left more than $30 million in trade payables outstanding.
U.S. Bankruptcy Court, Eastern District of California (Fresno Division)
Case Number
26-10978
Petition Date
March 6, 2026
Judge
Hon. Rene Lastreto II
DIP Facility
$22.3 million from Conterra Agricultural Capital ($10 million interim; 12% interest)
Stalking Horse
Conterra Agricultural Capital ($110 million + DIP payoff + assumed liabilities)
Credit Bid Settlement
Rule 9019 GUC Carveout approved June 18, 2026 ($500K + up to $3M; Adv. 26-01028 dismissed)
Auction / Sale
Held June 24, 2026; final sale order entered July 30, 2026 ($122.2M Conterra credit bid + $14.5M to other bidders)
Claims Agent
Donlin, Recano & Company
Case Snapshot
From 1945 Family Farm to Liquidity Collapse
The Hronis enterprise traces to Jim Hronis, who began farming alfalfa, cotton, wheat, and vegetables in the San Joaquin Valley in 1945 and ventured into table grapes in the mid-1970s on roughly 1,000 acres. His sons Kosta and Pete Hronis expanded the operation over the following decades, and by FY2023 the business reached $200.4 million in revenue. The company's 2023 sustainability report put total fruit harvest at 131 million pounds with 6,187 acres under cultivation that year. Today the Debtors do business as "Hronis Ranch" from a headquarters at 10443 Hronis Road in Delano, growing, packing, and shipping fruit harvested from approximately 6,000 acres of owned and leased land in Kern and Tulare Counties. A 2019 Thoroughbred Daily News profile of the racing family described the ranch as covering roughly 8,000 acres.
The asset base anchoring the sale is real estate. The Debtors own approximately 3,700 acres of farmland across 26 non-contiguous ranches, all on drip irrigation in established water districts, plus a 164,000-square-foot cold storage complex at Delano with 16 cold rooms, six pre-cooling rooms, and a pack room. Kosta and Peter Hronis each hold a 50% interest in most of the Debtors, with the balance held by other Hronis family members and third-generation trusts; the ten entities split operating, employment, and land-holding roles, with Hronis, Inc. as the customer-facing sales entity and Hronis Resource Management, LLC employing the year-round staff of about 29. During harvest peak the business requires roughly 2,500 workers supplied through non-debtor Grapeco Farm Management, Inc.
The Omnibus First Day Declaration of CRO Allen Soong identifies a sequence of shocks that drained liquidity over eight years. In 2017, the IRS determined an unpaid federal tax obligation of $12 million attributable to negligence by the Debtors' outside accountants; the Debtors borrowed to pay it, sued the firm, and recovered only $1 million, leaving an $11 million loss.
Hurricane Hilary and the 2023 crop. In August 2023, Hurricane Hilary set rainfall records and damaged the grape crop across the San Joaquin Valley. Kern County farm workers reported that the storm ruined many of the grapes, and industry analysis found no grower in the state was unaffected. Most growers invoked force majeure and cancelled deliveries, driving prices to historic highs. Hronis filled abandoned orders from competitors' customers, but worker productivity fell as laborers spent more time inspecting hand-picked bunches for damage, raising labor cost per box. With lower yields and higher costs, the business lost money at the operating level even as revenue rose more than 21% to $200.4 million, and catastrophic loss insurance recovered only $1 million to $2 million.
Refinancing and the 2024 red grape price decline. The Debtors refinanced their real estate loan at a higher interest rate, sold and leased back almost 900 acres, and turned first to a receivables factor and then to a private credit lender at more than twice their historical rate. The 2024 season then ended with excess red table grapes in the market just after the Debtors placed a new working capital facility with Conterra, and red grape prices fell from $24 to $8 per 19-pound box. More than $30 million in payables to trade vendors and contract growers remained outstanding into January 2025, the Debtors defaulted on the Conterra facility and negotiated a forbearance, and they began exploring strategic alternatives with Ducera Partners LLC.
The 2025 harvest and merchant cash advances. The 2025 season opened with projections 10% above 2024 but substantial rain in September and October forced an early end to the harvest, and total shipments fell below the prior year. Various Debtors took out at least five merchant cash advances during 2025; on December 17, 2025, Sun Pacific Farming Cooperative made a $10.045 million loan to consolidate them, while a separate DLP Funding advance led to New York litigation and a $5.035 million judgment by January 2026. By November 2025, Conterra had begun daily sweeps of the Debtors' accounts, and operations ran on incoming receivables and the slim remaining availability on the credit line.
The deterioration is visible across the Debtors' fiscal-year results, reported in the First Day Declaration for fiscal years ending October 31. Revenue fell 39% from a FY2023 peak of $200.4 million to $122.6 million in FY2025, operating losses widened each year to $12.8 million, and senior debt climbed to $151.8 million in FY2025 even as receivables thinned to $13.9 million against $29.9 million of payables at the petition date.
Metric ($000)
FY2022
FY2023
FY2024
FY2025
Petition
Revenue
164,829
200,367
147,999
122,646
—
Operating income
(5,812)
(3,621)
(9,171)
(12,833)
—
Accounts receivable
19,361
25,075
36,542
20,216
13,892
Accounts payable
18,454
20,527
37,252
24,989
29,863
Senior debt
124,486
127,136
122,268
151,825
144,124
Fiscal-Year Financial Results
Prepetition Capital Structure and Conterra Dominance
The Debtors entered chapter 11 with approximately $142.6 million in secured claims owed to Conterra across two facilities, plus additional secured debt to insiders and third parties. Conterra's path to control was recent: it assembled its position in the months before filing and, on the eve of the case, consolidated the senior real estate debt.
Conterra term loans (~$71.95 million). Five Debtors and the two Hronis principals entered into a Term Loan Agreement with AgAmerica Lending LLC dated December 29, 2023 for an aggregate $70 million in two notes ($50 million and $20 million), each bearing 11% annual cash interest and secured by senior deeds of trust on real property in Kern and Tulare Counties. AgAmerica assigned its rights to Ag REIT Two, LLC, and Conterra acquired the notes on or about February 6, 2026 — one month before the petition date — becoming the first-priority real property lienholder, with approximately $71.95 million due including accrued interest.
Conterra revolving line of credit (~$70.68 million). All Debtors entered into a Loan and Security Agreement with Conterra dated October 29, 2024, initially providing a $55 million revolving line that was increased by letter agreements to $85.85 million by June 2025. The line bears 9% cash interest plus 9% PIK interest, an 18% effective rate, secured by first-priority liens on the personal property of eight Debtors and junior deeds of trust on real property under an intercreditor agreement. Approximately $70.68 million in principal was outstanding at filing. A December 10, 2024 deposit account control agreement had already granted Conterra control over the Debtors' main account, including authority to direct funds without the company's consent.
Insider and third-party liens. In September 2025, the Debtors executed a secured note to Peter Hronis for up to $8 million at 10% interest, of which $2.96 million had been advanced by the petition date, secured by all personal property and deeds of trust on five Debtors. The December 2025 Sun Pacific Farming Cooperative and Evans AG GP loan of $10.045 million, due September 1, 2026 at 7%, was secured by all personal property, and the November 2025 DLP Funding merchant cash advance produced a $5.035 million New York judgment. Smaller secured items include a residual purchase-money obligation to Tonko and Lydia Zaninovich (~$428,000) and John Deere equipment financing (~$290,000), both outside Conterra's primary collateral.
Unsecured debt (~$30 million). The Debtors list approximately $30 million in aggregate unsecured claims, concentrated in trade debt, farm labor, logistics, and tax obligations. The largest are led by Batth Brothers Farm ($3.44 million), Robinhood Logistics ($3.12 million), and Espinoza Farm Labor Contractor ($2.22 million), per the top-20 list in the voluntary petition. Several growers have asserted claims under the Perishable Agricultural Commodities Act, which would carry trust priority if valid.
DIP Financing and the U.S. Trustee Objection
The Debtors sought authorization for a $22.303 million DIP facility from Conterra, the same lender holding the prepetition secured claims, providing $10 million on an interim basis and the full amount upon final approval. The non-default rate is 12%, the default rate 18%, with maturity generally July 1, 2026 and superpriority priming liens on substantially all assets. Before filing, the Debtors and their advisors contacted multiple potential DIP lenders; none submitted a formal proposal or was willing to engage in a contested fight over priming Conterra's liens, and CRO Soong's declaration states the DIP rate matches prepetition pricing and is below the prepetition default rate.
The U.S. Trustee for Region 17, Peter C. Anderson, filed a preliminary objection raising five concerns: the $10 million interim draw exceeded the budgeted need, which showed only $2.071 million required through March 28 and $5.36 million through April 4; the facility barred using DIP proceeds to investigate claims against Conterra and made any such investigation an event of default; the carve-out lacked a budget line for estate professionals and capped a successor trustee at $100,000; the release and waiver provisions risked conflict with Ninth Circuit law on nonconsensual third-party releases; and the stay-modification terms let Conterra sweep accounts and enforce remedies without a further order, allowing parties only five business days to seek emergency relief. The court entered an interim DIP order on March 12, 2026 and continued the matter; the DIP carried a milestone requiring a bidding-procedures motion within 14 days of the petition date, the mechanism that launched the sale process. Soong's declaration states that without funding for vine and tree maintenance, the Debtors would not produce a sufficient 2026 crop and would impair plant productivity for years and damage the underlying land value.
As the sale timeline slipped, the Debtors moved on June 15, 2026 to amend the final DIP order, seeking an increased commitment and an extension of the DIP maturity from July 1 to July 31, 2026 to cover additional harvest-season operating costs and professional and administrative expenses through the continued June 30 sale hearing. The Debtors stated they risked lacking the liquidity to operate within the next business week absent the additional funding, and the court set the amendment for hearing on shortened time at the same June 18, 2026 slot as the settlement-approval motion. The court granted the amendment on June 23, 2026, increasing the DIP Facility Commitment to $54.023 million and extending the maturity date to July 31, 2026.
Conterra's Stalking Horse Bid and the Section 363(k) Credit-Bid Challenge
The case is structured as a going-concern sale of substantially all assets under section 363, and after an April 7, 2026 hearing the court approved the form of asset purchase agreement and bidding procedures. On May 5, 2026, the Debtors filed their motion to sell substantially all assets free and clear of liens and to assume and assign executory contracts and leases. The assets on the block include the approximately 3,700 acres of owned farmland across 26 ranches and the Delano cold storage complex, marketed by GBB Advisors, the investment banker retained for the sale for its San Joaquin Valley agricultural M&A experience.
Conterra agreed to serve as stalking horse with a bid of $110 million, plus repayment of the DIP facility (estimated at roughly $20 million at closing), plus the assumption of certain liabilities, covering substantially all of the Debtors' assets. The bid would let the dominant prepetition secured and DIP lender acquire the enterprise it financed, and much of the consideration would take the form of a credit bid against Conterra's own claims rather than new cash. The Debtors' original schedule set a May 22 bid deadline, a May 27 auction, and a June 2 sale hearing.
That schedule slipped as the credit-bid dispute moved to the center of the case. Conterra moved to bifurcate and advance the credit-bidding portion of the sale so its rights under section 363(k) could be resolved on an expedited evidentiary track. On June 8, 2026, the court granted bifurcation and set the "Credit Bid Challenge" for an evidentiary hearing on June 18, 2026 at 9:30 a.m. in Fresno, with an expedited discovery schedule, direct testimony by declaration, and live cross-examination. The hearing will determine whether cause exists to deny or limit Conterra's right to credit bid. With that question carved out, the auction was reset to June 24, 2026 and the sale hearing to June 30, 2026. On June 10, 2026, the court approved a stipulation extending the front-end discovery deadlines for Conterra, the Debtors, and the Committee from June 8 to June 10 while leaving the June 18 hearing date in place; in that stipulation the parties stated they anticipate filing a further stipulation to resolve the evidentiary hearing.
The credit-bid challenge settled before trial. On June 11, 2026, the Debtors filed a motion to approve a Rule 9019 compromise among the Debtors, Conterra, and the Committee that averts the evidentiary trial and confirms Conterra's right to credit bid its $110 million stalking horse plus the amount borrowed under the DIP facility. Under the settlement terms, the Committee agreed to dismiss its adversary proceeding, withdraw its derivative-standing motion, and withdraw its objections to the credit bid and to the sale, releasing Conterra upon payment of an initial cash carveout. In exchange, holders of allowed general unsecured claims receive a "GUC Carveout" funded from four sources: $500,000 in initial cash; up to $3 million in additional cash drawn from a share of overbids, Conterra's recoveries from insiders and family members, and other sources; all Chapter 5 avoidance claims other than those against the Debtors' insiders or their family members; and D&O commercial tort claims pursuable against the Debtors' insurance. Conterra also conceded avoidance of its personal-property liens against Hronis Fruit Company LLC and Hronis Resource Management, LLC, retaining its lien rights under the land loan and the DIP facility, and may participate as a general unsecured creditor for any deficiency. CRO Soong's supporting declaration states the settlement removes litigation risk that threatened to deter other bidders or cause Conterra to withhold its stalking horse bid, and that delay would have added substantial harvest costs to the estate.
On June 12, 2026, the court shortened time and set the settlement-approval hearing for June 18, 2026 at 9:30 a.m. — the slot previously reserved for the now-vacated credit-bid evidentiary hearing — with the June 24 auction and June 30 sale hearing to proceed as scheduled. The stipulation sketches a consensual liquidating plan, supported by both the Committee and Conterra, intended to deliver a recovery to general unsecured creditors.
The court approved the settlement on June 18, 2026. The June 24 auction produced six individual ranch sales totaling $14.5 million and a Conterra credit bid of $122,193,698.17 — the $110 million stalking horse bid plus the outstanding DIP balance, net of the other winning bids — for the remaining assets. The court granted the sale motion at the June 30, 2026 hearing and entered a final sale order on July 30, 2026, approving the sale to Ag Funding SC III LLC, a Conterra entity, on an "as is, where is" basis with closing required within 15 days.
Creditors' Committee and the Adversary Proceeding Against Conterra
The U.S. Trustee appointed an Official Committee of Unsecured Creditors on April 30, 2026, with six members: Buttonwillow Warehouse Company, Batth Brothers Farm, Robinhood Logistics, Nutrien Ag Solutions, LMG Logistics, and Bloom Fresh International. The Committee retained Raines Feldman Littrell LLP, with Robert S. Marticello as lead counsel, and applied to employ Dundon Advisers LLC as financial advisor. From its formation, the Committee has treated the lender-led sale as the central problem, characterizing it in its objection to the sale as a de facto foreclosure engineered to benefit Conterra as an insider while leaving unsecured creditors with nothing.
On May 18, 2026, the Committee escalated on two fronts. It moved for derivative standing to pursue estate claims against Conterra, and it filed an adversary complaint (Adv. Proc. No. 26-01028) asserting seven counts: equitable subordination under section 510(c); declaratory judgment on Conterra's personal-property liens; avoidance of preferential transfers under sections 547, 550, and 551; a declaratory challenge to Conterra's right to credit bid under section 363(k); declaratory claims on commercial tort claims and on postpetition proceeds under section 552(b); and disallowance under section 502(d). The Committee's theory is that Conterra exercised improper prepetition control over operations — effectively dictating which trade creditors were paid week to week — and used that control to induce creditors to supply goods and services that built value for Conterra while those creditors went unpaid. It also alleges certain Conterra liens are unperfected or were perfected during the preference period, specifically as to Hronis Ranch, LLC and Hronis Resource Management, LLC, and it seeks to bar Conterra from credit bidding for cause. The court has authorized Rule 2004 examinations, including of Peter Hronis.
The Committee dismissed Adversary Proceeding No. 26-01028 and withdrew the derivative-standing motion under the June 11, 2026 Rule 9019 settlement described above.
Producer's Liens, PACA Claims, and the DLP Receivables Dispute
A second priority fight runs alongside the credit-bid challenge over whether agricultural lien claimants sit ahead of Conterra in the very collateral being sold. Committee member and grape grower Batth Brothers Farm filed a motion to determine lien priority on June 2, 2026, asserting that its statutory California producer's lien under Food & Agricultural Code section 55633 — which attached on delivery of grapes — is first in time and senior to Conterra's secured and DIP superpriority liens. Batth Brothers argues the DIP loan agreement itself excludes assets subject to valid, perfected, non-avoidable liens from Conterra's collateral, and it seeks confirmation that its claim of at least $3,135,075.86 is superior and cannot be paid from Conterra's recovery. The court separately entered a PACA claims procedures and bar date order on April 15, 2026, creating a process for Perishable Agricultural Commodities Act trust claims that, like the producer's lien, can carve value out of Conterra's collateral. On June 15, 2026, the Debtors filed their PACA trust claim report under that order, designating roughly $9.37 million across 15 entries as invalid — on grounds including failure to preserve PACA trust rights, waiver through consignment agreements, and claims for non-covered items such as consulting services or pallets — while recognizing only $136,532 as valid and adjusting the allowed amount to $117,840. Parties have until July 13, 2026 to object to an invalid-claim designation. To follow the PACA designations and the producer's-lien ruling, review the latest docket activity.
A related dispute concerns receivables pledged to DLP Funding. After the Debtors and DLP fought over control of accounts receivable subject to DLP's merchant-cash-advance claim, the court on May 11, 2026 denied the Debtors' sanctions motion without prejudice and established a segregated AR trust account, holding all prepetition receivables in trust and requiring that $3,644,482.52 of disputed AR remain in the account until the related adversary proceeding is resolved. Multiple other parties — including Bloom Fresh International, Farmer's National Bank of Danville, and Arrowhead Trust — also objected to the sale in mid-to-late May 2026.
Governance Transition and Restructuring Professionals
The Debtors' governance was restructured in the months before filing. On June 27, 2025, Paladin Management Group was retained for CRO services, with partners Allen Soong and Scott Avila serving as co-Chief Restructuring Officers, both Certified Insolvency & Restructuring Advisors. On January 13, 2026, Kosta Hronis, Peter Hronis, Peter N. Hronis, and Demetri Hronis resigned as officers, directors, and managers of all Debtor entities. The next day, each Debtor appointed Matthew English of Arch & Beam Global, LLC as independent director and sole member of a newly created Special Restructuring Committee, with Kosta and Peter Hronis continuing in operational roles reporting to Mr. English.
Saul Ewing LLP serves as bankruptcy counsel, with the court authorizing its employment on April 27, 2026; Ducera Partners LLC was the prepetition investment banker for strategic alternatives, and GBB Advisors leads the sale process. Donlin, Recano & Company was appointed claims and noticing agent after the petition package had originally proposed Angeion Group. The Debtors filed their schedules and statements of financial affairs on April 3, 2026, with global notes cautioning that reported asset values reflect net book value rather than the current market value the sale process is intended to establish.
Monthly fee statements are underway under the interim compensation procedures. Debtors' counsel Saul Ewing sought $343,873 in fees and $17,883 in expenses for May 2026, and Committee counsel Raines Feldman Littrell billed $109,104 for April after $62,075 for its first partial month of late March.
Key Timeline
Date
Event
1945
Jim Hronis founds the farming business in the San Joaquin Valley
2017
IRS audit determines $12 million unpaid federal tax obligation
August 2023
Hurricane Hilary strikes San Joaquin Valley, damaging the grape crop
December 29, 2023
AgAmerica $70 million term loan closed (11% interest)
October 29, 2024
Conterra $55 million revolving credit facility established
Fall 2024
Red grape prices fall from $24 to $8 per box
June 27, 2025
Paladin retained as CRO; Conterra line increased to $85.85 million
November 2025
Conterra begins daily account sweeps
December 17, 2025
Sun Pacific makes $10.045 million loan to consolidate MCAs
January 13–14, 2026
Hronis family resigns; Matthew English appointed independent director
February 6, 2026
Conterra acquires AgAmerica term loans, consolidating its position
March 6, 2026
Chapter 11 petition filed (10 entities)
March 12, 2026
Interim DIP order entered
April 7, 2026
Bidding procedures and form APA approved
April 15, 2026
PACA claims procedures and bar date order entered
April 30, 2026
Official Committee of Unsecured Creditors appointed (6 members)
Frequently Asked Questions
Why did Hronis file chapter 11?
The filing followed a series of financial shocks: a $12 million IRS audit in 2017, Hurricane Hilary's damage to the 2023 grape crop, a 2024 red grape price decline that left $30 million in trade payables outstanding, and rain-disrupted harvests in both 2023 and 2025. By filing, the Debtors carried roughly $142.6 million in secured debt to Conterra and had exhausted their borrowing capacity.
Who is buying Hronis, and why is the sale contested?
Conterra Agricultural Capital, the Debtors' dominant secured and DIP lender, was the $110 million stalking horse for substantially all assets. The creditors' committee opposed the sale as a de facto foreclosure and challenged Conterra's right to credit bid, but the parties reached a Rule 9019 settlement on June 11, 2026, approved by the court on June 18, 2026, that confirmed the credit bid and funded a carveout for unsecured creditors. The June 24, 2026 auction produced a $122.2 million winning credit bid for Conterra plus $14.5 million across six individually sold ranches, and the court entered a final sale order on July 30, 2026.
What is the Committee's adversary proceeding against Conterra?
The Committee filed a seven-count adversary complaint (Adv. 26-01028) seeking equitable subordination, avoidance of preferential transfers and invalid liens, and an order barring Conterra from credit bidding for cause. It alleges Conterra controlled which trade creditors were paid before the filing while those creditors went unpaid. Under the June 11, 2026 settlement, the Committee agreed to dismiss the adversary and release Conterra in exchange for the GUC Carveout.
Who is the claims agent for Hronis?
Donlin, Recano & Company serves as the claims and noticing agent, appointed after the petition package had originally proposed Angeion Group. A separate PACA claims procedures and bar date order governs Perishable Agricultural Commodities Act trust claims.
What is the DIP financing?
Conterra is providing a $22.3 million DIP facility at 12% interest, with $10 million available on an interim basis, to fund the 2026 farming season. The U.S. Trustee objected to the interim draw size, investigation restrictions, and release and stay-modification provisions.
damaged the grape crop https://www.freshplaza.com/north-america/article/9575591/hurricane-hilary-devastated-california-s-grape-crop/
ruined many of the grapes https://southkernsol.org/2023/09/22/devastating-hurricane-hilary-leaves-kern-county-farm-workers-struggling-for-income/
no grower in the state was unaffected https://stories.agronometrics.com/california-table-grape-growers-need-30-box-to-break-even/
New York litigation https://www.law.com/radar/card/newyork-kings-2734510-dlp-funding-llc-v-hronis-inc
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.