Brewster Heights Packing & Orchards - Chapter 11 Case Summary

Business Description

Headquartered in Brewster, Washington, Brewster Heights Packing & Orchards, LP ("BHPO," together with its Debtor affiliates, the "Debtors," and collectively with their non-Debtor affiliates, the "Company"), is a market-leading, vertically integrated grower, packer, marketer, and shipper of apples, cherries, and pears. With a legacy spanning over a century, the Company has established itself as one of the largest and most respected producers in the U.S. tree fruit industry, supplying high-quality fruit to customers across the globe.

• The Company is, at its core, a family-owned and operated business, now in its sixth generation of family leadership.
• The Company produces over 25 varieties of apples and cherries, including high-value proprietary varieties such as SugarBee™, Rockit™, and Lucy™ (Lucy Glo™ and Lucy Rose™), for which BHPO holds exclusive or leading grower rights. This diverse varietal mix enables the Company to meet evolving consumer preferences and maintain profitability despite commodity market volatility.

In fiscal year 2024, the Company sold approximately 17.3 million boxes of fruit, including 13.3 million boxes of apples and 3.4 million boxes of cherries, to more than 540 clients worldwide.

The Company is committed to innovation and sustainability, investing in advanced orchard management practices, cutting-edge packing technology, and regenerative agricultural methods. It has a proven track record of developing and commercializing new fruit varieties, expanding its international sales footprint, and pursuing value-added product opportunities, with ongoing capital investments in automation and facility expansion designed to increase capacity, improve efficiency, and support future growth.

• With its extensive land holdings, modern infrastructure, diverse product offerings, and strong market relationships, the Company is a cornerstone of the U.S. tree fruit industry. Its scale, vertical integration, and focus on innovation position it to continue delivering high-quality fruit to customers worldwide, while maintaining a commitment to sustainability, employee well-being, and the preservation of its family-owned legacy.

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Corporate History

The Gebbers family's roots in Brewster, Washington date back over 100 years. Over the decades, the family has expanded the business from its original timber and sawmill operations into one of the largest apple and cherry producers in the country.

• Debtor Gebbers Orchards, Inc. ("Gebbers Orchards") was the Company's original family farm and operating company.
• Debtors D&E Storage LLC ("D&E") and Brewster Heights Packing, Inc. ("BHP") were Gebbers Orchards' warehouse operations, which the Gebbers family co-owned with another family.
• That operation resulted in bankruptcy in 2002, following which the remaining assets of D&E, BHP, and Gebbers Farms, Inc. were integrated to form a new operating company, BHPO.

Corporate Structure

Debtor BHPO is a Nevada limited partnership and the central operating entity for the Debtors. The sole general partner of BHPO is Gebbers Orchards, Inc., a Washington corporation.

• All of the other Debtors are Washington limited liability companies, with the exception of Westco Sales, Inc., which is a Nevada corporation, and REPO, LLC, a Nevada limited liability company. All are wholly owned by BHPO.
• Today, BHPO and D&E own the Company's warehouses, but neither maintains its own separate books and records.
• With the exception of Gebbers Farms, Inc., the Debtors' orchard operations are conducted through a series of wholly owned subsidiaries of BHPO, each of which holds the land on which one or more orchards operate. These orchard land-holding entities include P&G Orchards, LLC; Eastco, LLC; Northco, LLC; Westco Orchards, LLC; and REPO, LLC.
  • TJF Properties, LLC is a wholly owned subsidiary of Eastco that was formed to acquire one specific orchard property.
  • C&M II, LLC is a wholly owned subsidiary of BHPO that holds land but, unlike the other orchard entities, does not have any active orchards operating on its property.
• Debtor GF SA, LLC ("GFSA") is a U.S. holding entity that serves as one of the layers in BHPO's ownership structure for its investment in CHISA, a warehouse and orchard operation in Chile.
  • BHPO previously owned approximately 25% of CHISA through multiple layers of entities below GFSA, which are foreign entities and are not debtors in these Chapter 11 Cases.
  • The Company has written down its investment in the Chilean operations significantly due to viability issues with those operations.
• Lastly, Debtor Westco Sales, Inc., another subsidiary of BHPO, is an inactive entity which does not maintain its own books and records.

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Operations Overview

The Company operates through BHPO, doing business as Gebbers Farms, and is supported by a network of affiliated entities involved in growing, packing, and distribution. The Company's operations are fully integrated, encompassing the cultivation of fruit on approximately 8,500 acres of prime orchard land, state-of-the-art packing and storage facilities, and a robust sales and marketing platform. Its vertically integrated model allows it to capture value at every stage of the supply chain, from growing and harvesting to packing, marketing, and shipping.

Orchards and Facilities

• The Company manages approximately 6,816 acres of apple orchards and 1,581 acres of cherry orchards, with an additional 1,659 acres of pre-productive plantings.
• The Company's facilities include ten owned packing and storage houses, with a combined cold storage capacity of over 709,000 square feet and the ability to pack approximately 287,000 apple bins and 2.4 million cherry boxes annually.
• These modern facilities are strategically located in the Okanogan fruit belt, an area renowned for its optimal growing conditions, which support consistent, high-quality production.

Sales and Marketing

• Gebbers Farms is a key partner in Alta Fresh DBA Chelan Fresh Marketing ("Chelan Fresh"), a subsidiary of BHPO formed in 2004 to be the Company's sales and marketing arm. Chelan Fresh, which is not a debtor in these Chapter 11 Cases, distributes the Company's fruit to both domestic and international markets.
• The Company's partnership with Chelan Fresh provides access to a global customer base, including long-standing relationships with major U.S. grocery retailers and international buyers. Chelan Fresh's centralized marketing desk and brand-driven strategy have enabled the Company to command premium pricing for its proprietary varieties of fruit.

Leadership and Workforce

• The Company's leadership team includes members of the founding family, now in its sixth generation, who remain actively involved in day-to-day operations and strategic planning.
• The Company's workforce includes both year-round and seasonal employees. As of the Petition Date, the Debtors employ a total of approximately 3,742 employees.
  • A significant portion of the Debtors' employees are employed through the "H-2A Program," a visa program administered by the U.S. Department of Labor which permits U.S. employers to hire non-U.S. citizens to fulfill temporary agricultural jobs.

Affiliated Farms and Cost Sharing

• The Debtors' operations are conducted on or around properties that are adjacent to or nearby other farms owned or operated by related-party family entities or certain unrelated growers (collectively, the "Affiliated Farms") in and around Brewster, Washington. Given the proximity of these operations and the shared nature of certain resources and infrastructure, the Debtors and the Affiliated Farms have long shared certain operating costs.
• To streamline this arrangement, in May 2025, BHPO, the Gebbers family, and the Affiliated Farms formed Gebbers Farm Services, LLC ("GFS") as a centralized cost-sharing vehicle, pursuant to which GFS pays the shared operating costs up front on behalf of the Debtors and the Affiliated Farms, aggregates those expenditures, and at month-end issues a single invoice to BHPO and each Affiliated Farm for its allocable share.

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Prepetition Obligations

Prior to the filing of these Chapter 11 Cases, the Debtors were party to three primary secured credit facilities (together with all related documents, the "Prepetition Credit Facilities"). The Debtors owe Prudential and BMO in the aggregate no less than approximately $225,179,440.69. The Company's prepetition capital structure is summarized below.

BMO Credit Facilities

• The Debtors are party to two secured credit facilities with BMO Bank N.A., as successor-in-interest to Bank of the West ("BMO"): a syndicated revolving credit facility (the "Syndicated Facility"), with BMO acting as administrative agent for itself and other lenders (the "Syndicated Lenders"); and a separate bilateral revolving credit facility (the "Bilateral Facility," and together with the Syndicated Facility, the "BMO Facilities"), with BMO as sole lender.
• Syndicated Facility: Evidenced by a Loan and Security Agreement dated as of June 10, 2021, the Syndicated Lenders provided senior secured revolving line of credit loans in the maximum principal amount of up to $88,000,000 and senior secured term loans in the original aggregate principal amount of $14,840,000.
  • As of the Petition Date, the Debtors owed the Syndicated Lenders approximately $56,270,440.61, plus additional accrued and unpaid interest, fees, costs, expenses, protective advances, indemnification obligations, and other amounts due.
  • The obligations are secured by liens in substantially all of the Debtors' personal property assets, as well as other collateral, including liens on the real properties described as the "King Blossom, CA Property," the "Hunt Ranch & Asmussen Property," the "Gamble Lumber Company Town Mill Site," the "Snyder Flats Property," and the "MC-Guelich Property."
• Bilateral Facility: Evidenced by a Loan and Security Agreement dated as of August 29, 2022, BMO provided a senior secured term loan in the original principal amount of $8,500,000.
  • As of the Petition Date, the outstanding principal balance was approximately $6,569,000.08, plus additional accrued and unpaid interest, fees, costs, expenses, protective advances, indemnification obligations, and other amounts due.
  • The obligations are secured by a lien on the "King Blossom, CA Property," commonly known as 125 North Star Road, Brewster, WA 98812. The BMO Bilateral Loan Documents are cross-defaulted with the BMO Syndicated Loan Documents and cross-collateralized with part of the Syndicated Collateral.
• Certain Events of Default occurred under both facilities. On September 10, 2025, the Debtors executed the BMO Syndicated Forbearance Agreement and the BMO Bilateral Forbearance Agreement, under which the lenders agreed to forbear from exercising remedies through November 14, 2025.
  • The forbearance was conditioned upon, inter alia, the Debtors' continued retention of Peter Richter, as chief restructuring officer, and Capstone Capital Markets LLC, as investment banker ("Capstone"), to market the sale of substantially all of the Debtors' assets, and established certain sale milestones and consummation of a sale by November 1, 2025.
  • No further forbearance agreements have been entered into with respect to the BMO Facilities, each of which expired on November 14, 2025, without the consummation of a sale.

Prudential Term Loan Facility

• The Debtors are party to a long-term mortgage financing facility with The Prudential Insurance Company of America ("Prudential"), evidenced by a Loan Agreement dated as of May 28, 2020 (as modified) and three separate promissory notes originally aggregating $187,000,000.00. The facility is secured by, among other things, a Mortgage, Security Agreement, Crop Filing and Fixture Filing dated as of May 28, 2020.
• As of February 23, 2026, the aggregate principal balance outstanding under the Prudential Notes was approximately $162,340,000.00.
• Following covenant breaches, Prudential and the Debtors entered into the Prudential Forbearance Agreement, dated as of March 27, 2026, which amended the facility and all prior forbearance agreements, deferred all scheduled debt service during the forbearance period, and provided that Prudential would forbear from exercising remedies until the earliest of May 1, 2026, and the occurrence of a Forbearance Termination Event.
  • No further forbearance agreements have been entered into since its expiration; however, Prudential has delivered reservation of rights letters to the Debtors on multiple occasions.

Backstop Ag Capital Crop Loan

• On March 25, 2026, BHPO, Backstop Ag Capital, a Washington joint venture comprising a group of non-debtor individuals with family or personal relationships with BHPO's equity holders ("Backstop"), and Prudential entered into a Term Sheet under which Backstop agreed to provide BHPO an $8,000,000 crop loan (the "Crop Loan") to fund (i) the production of the 2026 orchard crop, (ii) administrative and BHPO advisor costs, and (iii) preparation for a chapter 11 filing, each pursuant to an agreed budget.
• The Crop Loan is secured by a first priority crop lien in the 2026 orchard crop pursuant to RCW 60.11.050(4), consented to via an agreed subordination agreement with each of Prudential and BMO, and is pari passu with other loans provided for the 2026 crop.
• The Crop Loan was conditioned upon Prudential agreeing to forbear from exercising remedies through May 1, 2026, subject to BHPO achieving certain milestones, and required the reconstitution of the BHPO Board of Directors to consist of two existing directors and one independent director acceptable to Prudential.

Westerdahl Orchard Loan

• On or about June 27, 2013, BHPO and North Cascades National Bank ("NCNB") entered into a Business Loan Agreement evidencing a commercial loan in the original principal amount of $1,400,000.00, with a maturity date of June 27, 2033, secured by a Mortgage dated June 27, 2013.
  • As of the Petition Date, the aggregate principal balance outstanding under the NCNB Note was approximately $700,912.16.

Happy Valley Loan

• On or about May 19, 2022, Debtor Westco Orchards, LLC and Happy Valley USA Credit III, LLC ("Happy Valley") entered into a Real Estate Term Loan 1 Note in the original principal amount of $4,200,000.00, the proceeds of which were used to purchase real estate.
  • The Happy Valley Term Loan is an interest-only loan, with interest payable quarterly in arrears and the entire principal balance due as a lump sum upon maturity on May 19, 2027.
  • The obligations are secured by a first priority mortgage, assignment of rents, and security agreement on certain real property located in Okanogan County, Washington, and are guaranteed by BHPO.
  • As of the Petition Date, the aggregate principal balance outstanding was approximately $4,200,000.00.

Unsecured Debt

• Over a number of years, BHPO accrued accounts payable in favor of Apple House. On or about December 1, 2019, BHPO and Apple House converted the outstanding balance of approximately $6,000,000.00 into a long-term note (the "Apple House Note") pursuant to a Debt Restructure Agreement, with repayment in monthly installments amortized over fifteen years commencing on September 1, 2020. The Apple House Note is not secured by any collateral and is subordinate to all other debts.
• The Debtors' books and records reflect approximately $24,000,000.00 in unsecured debt incurred in the ordinary course of business, principally comprised of trade payables.

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Events Leading to Bankruptcy

The Debtors filed voluntary Chapter 11 petitions on June 4, 2026 (the Petition Date) in the United States Bankruptcy Court for the Eastern District of Washington, before the Honorable Frederick P. Corbit, with the lead case captioned In re Brewster Heights Packing & Orchards, LP, Case No. 26-01136. This overview is drawn from the Declaration of Brooke McGuire, the Debtors' Chief Financial Officer, filed in support of the Chapter 11 petitions and first day pleadings.

Liquidity Squeeze and Industry Headwinds

Since approximately the fourth quarter of 2024, the Debtors have been operating under an increasingly acute liquidity squeeze driven by the over-levering of their debt, competing positions taken by their senior secured lenders, and the working-capital demands attendant to the 2025 crop cycle. This financial distress has been compounded by severe headwinds facing the Washington agricultural sector as a whole.

• In 2024, Washington's agricultural operators experienced an estimated cumulative take-home pay of -$300 million, the lowest "returns to operators" metric of any state in the nation.
• Total production expenses for Washington producers have nearly doubled since 2016, with the state ranking eighth in the nation for total agricultural production expenses, yet 42nd for net farm income, driven by rising input costs, trade challenges, labor and workforce concerns, fluctuations in tariffs, land cost and development pressure, changing climatic conditions, and infrastructure challenges.
• These cost pressures are particularly acute for tree-fruit producers like the Debtors. In 2023, labor alone accounted for 99% of the average apple producer's return per bin, leaving virtually no margin to absorb additional financial shocks. Moreover, the concentration of apple and cherry production in the state declined by 7% and 52%, respectively, between 2017 and 2023.

Defaults and Failed Refinancing Efforts

Although the Debtors remained current on all scheduled debt service until January 2025, they triggered defaults under certain financial covenants under the Prudential Loan Agreement in late 2024, and, in May 2025, under the Syndicated Facility and Bilateral Facility as well. The resulting defaults prompted both Prudential and BMO, beginning in late 2024 to early 2025, to declare reservations of rights and to condition any further credit availability upon rapidly consummating either a sale of the Company or a refinancing that would take both lenders out in full.

• Against this backdrop, the Debtors engaged a chief restructuring officer, financial advisor, and Katten Muchin Rosenman LLP as legal advisor, and retained Capstone to commence a formal marketing process in June 2025.
• The Debtors launched a refinancing process during the fourth quarter of 2024 and into 2025, which culminated in extensive and exclusive negotiations with a single interested party that had significant existing investments in the Washington agricultural sector and for which the Debtors' assets would be complementary. Ultimately, these negotiations proved unsuccessful, leaving the Debtors in a severe liquidity crisis just as the 2025 crop harvest was beginning.

Forbearance Extensions and Stalled Proposals

• Operating under short-term forbearance agreements, the Debtors obtained extensions from BMO and Prudential through August 31, 2025, conditioned on the Debtors conducting a concurrent and expedited sale process; BMO also agreed to permit the continued use of its cash collateral during the forbearance period.
• Through Capstone's efforts, the Debtors received four indications of interest from prospective transaction parties in August 2025. Two were immediately deemed unacceptable, while the remaining two showed potential, prompting BMO and Prudential to agree, both formally and informally, to forbear from exercising their respective rights and remedies until approximately November 15, 2025. By the end of 2025, however, neither proposal materialized.
• In January 2026, the Debtors engaged in extensive discussions with BMO and Prudential—including weekly, and at times daily, discussions with BMO concerning the continued use of its cash collateral—weighing a range of alternatives, including foreclosure, piecemeal asset sales, receivership, and a chapter 11 filing. These discussions continued through the end of March 2026, at which point BMO informed the Debtors that no further use of its cash collateral would be permitted.

The Crop Loan and Path to Filing

The Debtors' liquidity position was further exacerbated by the timing of the Company's seasonal cost cycle, as operating expenses were set to escalate materially on a week-by-week basis with the onset of the crop season. As of late March 2026, the Company appeared destined to transition into either a receivership proceeding or a chapter 11 filing on or around April 1, 2026.

• However, the Company was able to secure the Crop Loan from Backstop, which was designed to fund operations through April, affording the Company additional time to delay a chapter 11 filing until May, to continue exploring alternative sources of liquidity, and to fund operations necessary to cultivate the 2026 crop. As a condition, the Company was required to prepare for a May 1, 2026, filing on a very limited budget and to appoint an independent director, among other conditions.
• During April and May 2026, Capstone continued to market the Debtors' assets. The Debtors and Capstone have been in contact with over 80 potentially interested parties as part of this prepetition marketing process and entered into 49 nondisclosure agreements, ultimately yielding seven letters of intent.
  • Following evaluation of these proposals, BHPO's Board of Directors approved a letter of intent (the "LOI") with U.S. Farming Realty Trust III, LP ("U.S. Farming") for a proposed transaction entailing a sale or restructuring of substantially all of the Debtors' assets pursuant to Bankruptcy Code § 363. Subject to Bankruptcy Court approval, U.S. Farming has agreed to serve as the Debtors' stalking horse bidder.
• Concurrently, the Company obtained DIP financing commitments from Sandton Capital Solutions Master Fund VI, LP ("Sandton"), and was able to identify limited additional liquidity through government grants and customer advances sufficient to sustain operations until June 2026.

Chapter 11 Filing and Go-Forward Strategy

Without immediate access to liquidity, the Debtors could not fund the imminent 2026 crop harvest, preserve perishable inventory, or maintain the going-concern value necessary to consummate a value-maximizing sale. With the Prepetition Credit Facilities having expired and both lenders insisting that any further borrowings be made only within a chapter 11 framework, the Debtors were left with no practical alternative but to seek the protection of the Bankruptcy Code.

• The Debtors intend to use these Chapter 11 Cases to stabilize their operations and preserve going-concern value during the 2026 crop season. To that end, the Debtors have secured DIP financing from Sandton and will seek Court approval on an emergency basis to ensure sufficient liquidity to fund the harvest, maintain perishable inventory, and meet essential operational obligations without interruption.
• The Debtors intend to conduct a court-supervised sale process either pursuant to Bankruptcy Code § 363 or a plan, seeking approval of bidding procedures under which the proposed transaction with U.S. Farming will be subject to higher and better offers. The Debtors will also consider bids for discrete asset packages or combinations thereof to maximize recoveries.
• Ultimately, the Debtors anticipate exiting these Chapter 11 Cases through confirmation of a plan and will work expeditiously toward that end.