Hronis: California Produce Grower Files 10-Debtor Chapter 11

Hronis, Inc. and nine affiliated entities filed chapter 11 on March 6, 2026, in the U.S. Bankruptcy Court for the Eastern District of California, 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 California's San Joaquin Valley since 1945, shipping more than 80 million pounds of table grapes annually to major retailers and supermarket chains. The Debtors entered chapter 11 carrying approximately $142.6 million in secured claims owed primarily to a single lender, Conterra Agricultural Capital, after a cascade of adverse events beginning with a $12 million IRS audit in 2017, consecutive weather-damaged harvests, and a collapse in red grape prices that left more than $30 million in trade payables outstanding.

The case is structured as a freefall filing with a going concern 363 sale as the primary path forward. Conterra, the dominant prepetition secured creditor, is also providing a $22.3 million DIP facility to fund the 2026 farming season and a marketing process. GBB Advisors has been retained as investment banker. The U.S. Trustee filed a preliminary objection to the DIP facility, raising concerns about investigation restrictions, release provisions, and the scope of the interim draw.

Debtor(s)	Hronis, Inc. (10 jointly administered entities)
Court	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)

Hronis Bankruptcy Status and 2026 Crop Timeline

The case is still in its first month, but the near-term record already centers on two questions: whether the Debtors can keep the 2026 crop cycle funded and whether Conterra's lender-led sale path will survive final scrutiny. The court entered an interim DIP order on March 12, 2026 authorizing immediate borrowing and continued the final DIP hearing to April 7, 2026 after the United States Trustee objected to the size of the interim draw, the investigation restrictions, and the stay-modification terms in the proposed facility.

That calendar matters because the DIP motion says vine and tree maintenance for the 2026 crop cannot be deferred without damaging both current-season revenue and the underlying collateral value for later seasons. The Debtors' stated path is to use the Conterra facility to keep farming operations moving through the spring while GBB Advisors markets the business as a going concern under section 363.

From 1945 Alfalfa Farm to $200 Million Grape Operation

The Hronis enterprise traces to Jim Hronis, who started farming alfalfa, cotton, wheat, and vegetables in the San Joaquin Valley in 1945. In the mid-1970s, the family ventured into table grapes, initially farming approximately 1,000 acres. Jim's sons, Kosta Hronis and Pete Hronis, expanded the operation over the following decades, accumulating agricultural land in the south-east corner of the San Joaquin Valley --- an area with a warm microclimate suited for citrus production and vine crops. A 2019 Thoroughbred Daily News profile described the ranch as covering approximately 8,000 acres total. By FY2023, the Business reached $200.4 million in revenue.

The Debtors operate as a single business enterprise headquartered at 10443 Hronis Road in Delano, California, doing business under the name "Hronis Ranch." As a vertically integrated producer, Hronis cultivates permanent vines of several grape varieties that yield fruit from July through November, harvests and packs grapes into boxes by hand, stores packed boxes in cold storage for up to 45 days, and ships to third-party customers. The main Delano complex includes a 164,000-square-foot cold storage facility with 16 cold storage rooms, six pre-cooling rooms, and a pack room.

In the late 1980s, the family began growing citrus, enabling year-round harvesting, though citrus currently represents less than 10% of revenue. The Debtors recently expanded to planting pistachios, but that crop will not generate meaningful revenue for at least another two seasons. The company's approximately 3,700 acres of owned farmland comprises 26 non-contiguous ranches in Kern County and Tulare County, all irrigated with drip systems. Most of the fruit is harvested from approximately 6,000 acres of owned and leased land.

Ownership and entities. Kosta Hronis and Pete Hronis each hold a 50% ownership interest in most of the Debtors. Three exceptions: Hronis Ranch, LLC is wholly owned by Demetri Hronis (Kosta's son); Hronis Citrus, LLC includes six trusts in the names of third-generation Hronis family members; and The Hronis Family Limited Partnership has similar trust interests. All equity is held by Hronis family members. The ten debtor entities serve distinct roles: Hronis, Inc. is the customer-facing sales entity; Hronis Farming, LP carries out all farming operations; Hronis Resource Management, LLC employs all 29 year-round staff; and four land-holding entities (Hronis Land Company, Hronis Capital Assets, Hronis Ranch, and The Hronis Family Limited Partnership) collectively own the 3,700 acres.

Workforce. Year-round headcount is approximately 29 full-time employees and 20 contractors. During harvest peak, the Business requires 2,500 workers to harvest, pack, and ship fruit. Non-debtor Grapeco Farm Management, Inc. (owned by Demetri Hronis) contracts with independent labor contractors to supply seasonal workers.

IRS Audit, Hurricane Damage, and Liquidity Collapse

The Omnibus First Day Declaration identifies a sequence of adverse events that steadily drained liquidity over eight years.

The $12 million IRS audit (2017). In 2017, the IRS determined that the Debtors had an unpaid Federal tax obligation of $12 million due to negligence by their outside accounting firm. The Debtors immediately took out a loan to pay the obligation and sued the accounting firm but recovered only $1 million. The unrecovered $11 million loss left the Business particularly vulnerable to subsequent shocks.

Hurricane Hilary (August 2023). Hurricane Hilary struck the San Joaquin Valley, setting rainfall records and decimating the grape crop across the region. Kern County farm workers reported that the storm ruined many of the grapes, leaving fields unusable. Industry analysis at the time found that not a single grower in the state was unaffected. Most growers invoked force majeure and cancelled deliveries, driving prices to historic highs. Hronis attempted to capture new accounts by filling abandoned orders from competitors' customers, but the strategy backfired: worker productivity plummeted as laborers spent more time inspecting each bunch for storm damage, increasing labor cost per box. With lower yields and higher costs, the Business lost money at the operating level even though revenue increased more than 21% to $200.4 million. The Debtors' catastrophic loss insurance recovered only $1 to $2 million.

Refinancing spiral (2023-2024). Diminished liquidity and poor financial performance made the Debtors a riskier credit. They were forced to refinance their real estate loan at a higher interest rate, then sold and leased back almost 900 acres. Unable to secure working capital on normal terms, the Debtors turned first to a receivables factor and ultimately to a private credit lender at more than twice their historical interest rate, compounding the liquidity crunch.

Red grape price collapse (fall 2024). The 2024 season ended with excess red table grapes in the market just after the Debtors had placed a new working capital facility with Conterra. Prices for red grapes collapsed from $24 to $8 per 19-pound box. Liquidity became so tight that more than $30 million in payables owed to trade vendors and contract growers remained outstanding into January 2025. The Debtors defaulted on the Conterra facility and negotiated a forbearance while beginning to explore strategic alternatives with Ducera Partners LLC.

2025 harvest disrupted. The 2025 season initially showed promise, with industry observers projecting volumes 10% above 2024. But substantial rain in September and October forced premature termination of the harvest. Total grape shipments fell below prior year. Despite months of effort --- including personal cash contributions by shareholders --- the Debtors were unable to consummate a strategic sale or recapitalization.

Merchant cash advances. In a signal of acute distress, various Debtors took out at least five merchant cash advance loans during 2025. On December 17, 2025, Sun Pacific Farming Cooperative made a $10.045 million loan to consolidate and pay off five MCAs. A separate DLP Funding MCA (November 2025) resulted in New York litigation and a $5.035 million judgment by January 2026. By November 2025, Conterra had begun daily sweeps of the Debtors' bank accounts. Operations were largely funded from incoming receivables and minimal remaining draws on the credit line.

Prepetition Capital Structure and Conterra Dominance

The Debtors entered chapter 11 with approximately $142.6 million in secured claims owed to Conterra Agricultural Capital across two facilities, plus additional secured debt to insiders and third parties.

Conterra term loans (~$71.95 million). Five Debtors entered into a Term Loan Agreement with AgAmerica Lending LLC in December 2023 for an aggregate $70 million in two notes ($50 million and $20 million), each bearing 11% annual cash interest. Secured by senior Deeds of Trust on real property in Kern County and Tulare County. AgAmerica assigned its rights to Ag REIT Two, LLC, and Conterra acquired the notes from Ag REIT Two on approximately February 6, 2026 --- one month before the petition date --- becoming the first-priority real property lienholder. As of filing, approximately $71.95 million was due including accrued interest.

Conterra revolving line of credit (~$70.68 million). All Debtors entered into a Loan and Security Agreement with Conterra in October 2024, initially providing a $55 million revolving line. The facility was increased by letter agreements to $85.85 million by June 2025. The line bears 9% cash interest plus 9% PIK interest, for an effective 18% annual rate. Secured by first-priority liens on all personal property of eight Debtors and junior Deeds of Trust on real property. As of filing, approximately $70.68 million in principal was outstanding.

Peter Hronis insider loan (~$2.96 million). In September 2025, the Debtors executed a secured promissory note to Peter Hronis for up to $8 million at 10% interest. By the petition date, $2.96 million had been advanced. Secured by all personal property and Deeds of Trust on five Debtors' real property.

Sun Pacific (~$10.2 million). A December 2025 loan from Sun Pacific Farming Cooperative and Evans AG GP for $10.045 million used to pay off five MCAs. Due September 1, 2026, at 7% interest. Secured by all personal property.

DLP Funding (~$5.04 million). A November 2025 merchant cash advance agreement that resulted in a $5.035 million judgment in New York state court after the Debtors failed to make a stipulated settlement payment.

Unsecured debt (~$30 million). Approximately $30 million in aggregate unsecured claims, concentrated in trade debt, farm labor, logistics, and tax obligations. Several parties have asserted PACA (Perishable Agricultural Commodities Act) claims, which would carry trust priority if valid.

DIP Financing and the Conterra Facility

The Debtors sought authorization for a $22.303 million DIP facility from Conterra, the same lender holding the prepetition secured claims. The facility provides $10 million on an interim basis and the full amount upon final approval. The non-default interest rate is 12%, with a default rate of 18%. Maturity is generally July 1, 2026.

No alternative lenders. Before filing, the Debtors and their advisors contacted multiple potential DIP lenders, including agricultural lenders and existing creditors. None submitted formal proposals; none was willing to engage in a contested fight over priming Conterra's existing liens. Several lenders who discussed preliminary terms offered conditions inferior to Conterra's proposal.

UST objection. The U.S. Trustee for Region 17 filed a preliminary objection raising five concerns: (1) the $10 million interim draw exceeded what the budget showed as necessary to avoid immediate harm --- the budget indicated only $2.071 million was needed through March 28 and $5.36 million through April 4; (2) the facility prohibits using DIP proceeds to investigate claims against the DIP Lender, and makes any such investigation an event of default; (3) the professional fee carve-out lacked a budget line item for estate professionals and capped a successor trustee at $100,000; (4) release and waiver provisions may violate Ninth Circuit law on nonconsensual third-party releases; and (5) stay-modification provisions allow Conterra to sweep accounts and enforce remedies without a further court order, with only five business days for parties to seek emergency relief.

Interim approval. The court entered an interim DIP order on March 12, 2026, with the DIP hearing continued to April 7, 2026 for final approval.

Why the DIP matters for the 2026 crop. The 2025 crop has been harvested. Ordinarily, the Debtors begin farming operations for the next crop in January. If the Debtors cannot immediately fund further farming operations, they will not produce a sufficient 2026 crop, and the failure to maintain vines and trees would impair plant productivity for years and damage the value of the underlying land.

CRO Appointments and Governance Transition

The Debtors' governance underwent a wholesale restructuring in the months before filing. On June 27, 2025, Paladin Management Group was retained to provide CRO services, with partners Allen Soong and Scott Avila serving as co-Chief Restructuring Officers. Both are 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 following day, each Debtor appointed Matthew English of Arch & Beam Global, LLC as independent director and sole member of a newly created Special Restructuring Committee. Kosta and Peter Hronis continue to serve in operational roles, reporting to Mr. English.

Key professionals. Saul Ewing LLP serves as proposed bankruptcy counsel. Ducera Partners LLC was retained prepetition to explore strategic alternatives. GBB Advisors has been selected as investment banker for the going concern sale process, chosen for its experience in agricultural M&A in the San Joaquin Valley. Donlin, Recano & Company was appointed as claims and noticing agent.

Key Timeline

Date	Event
1945	Jim Hronis founds the farming business in the San Joaquin Valley
Mid-1970s	Family enters the table grape business, farming ~1,000 acres
2017	IRS audit determines $12 million unpaid Federal tax obligation
August 2023	Hurricane Hilary strikes San Joaquin Valley, devastating 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 collapse from $24 to $8 per box
June 27, 2025	Paladin Management Group retained as CRO; Conterra line increased to $85.85 million
August 2025	Debtors exhaust availability on Conterra credit line
November 2025	Conterra begins daily account sweeps
December 17, 2025	Sun Pacific makes $10.045 million loan to consolidate MCAs
January 13, 2026	Hronis family members resign as officers and directors
January 14, 2026	Matthew English appointed independent director; Special Restructuring Committee formed
February 6, 2026	Conterra acquires AgAmerica term loans, consolidating secured position
March 6, 2026	Chapter 11 petition filed (10 entities)
March 11, 2026	First day hearing; most first day motions granted; DIP hearing continued
March 12, 2026	Interim DIP order entered
April 7, 2026	Final DIP hearing and lease rejection hearing scheduled
April 22, 2026	Chapter 11 status conference scheduled

Frequently Asked Questions

Why did Hronis file chapter 11?

The filing followed a cascade of financial shocks: a $12 million IRS audit in 2017, Hurricane Hilary's devastation of the 2023 grape crop, a red grape price collapse in 2024 that left $30 million in trade payables outstanding, and rain-disrupted harvests in both 2023 and 2025. By the time of filing, the Debtors carried approximately $142.6 million in secured debt to Conterra and had exhausted their borrowing capacity.

Who is the claims agent for Hronis?

Donlin, Recano & Company serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What is the Debtors' plan for emerging from chapter 11?

The Debtors intend to pursue a going concern sale of all assets under section 363 of the Bankruptcy Code, with GBB Advisors as investment banker. A plan of reorganization remains a possible alternative if it would maximize value.

How large is the Hronis operation?

Hronis farms approximately 6,000 acres of owned and leased land in Kern and Tulare Counties, operating a 164,000-square-foot cold storage facility. The Business generated $122.6 million in revenue in FY2025 and requires up to 2,500 workers during harvest season.

What is the DIP financing?

Conterra Agricultural Capital is providing a $22.3 million DIP facility at 12% interest, with $10 million available on an interim basis. The DIP financing is critical to funding the 2026 farming season.

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