the town dandy / By Hank Sims

Milk Dud

(April 23, 2009)  Wasn’t it just last Tuesday (April 14) that the Humboldt County Board of Supervisors preliminarily approved the expense of $22,000 in scare county funds to help rescue the Humboldt Creamery? Wasn’t the idea to hire someone that would write up a grant proposal which, if successful, would have resulted in the expenditure of even greater quantities of taxpayer money in this (we now know) doomed cause?

Didn’t the proposal meet with unanimous approval from the elected officials and staff present? Didn’t county Economic Development Coordinator Jacqueline Debets tell the board, “I think you probably understand that unto itself, the creamery is a viable business”? Didn’t Supervisor Bonnie Neely return the compliment by saying, “I just want to compliment the staff for stepping up, and coming forward with some solutions for Humboldt Creamery. It’s a viable, great business in our community”? Didn’t County Administrative Officer Loretta Nickolaus say of the Creamery leadership that “they’ve been doing everything they can to get back on their feet, and that we are able to perhaps help them is great”?

Well, yes, but in truth the conversation was much more nuanced than that. The approval of the motion carried with it many provisos, all of which added up to the idea that the Creamery would have to demonstrate that it could again become a going concern before penny one was actually spent.

Still, it’s a bit of a head-twister to realize, as we now can, that just three days after that Supes meeting, during which the word “viable” was batted back and forth like a badminton shuttle, the members of the Creamery cooperative assembled and authorized their interim Chief Executive Officer, Len Mayer, to file for bankruptcy. The weight of the crippled company’s $54 million debt had finally buckled it.

As always in such cases, some poor souls are left holding debt unsecured by any solid assets, and no immediate cause to believe that they’ll ever see anything more than pennies on the dollar. One on the largest unsecured creditors in the Humboldt Creamery bankruptcy is Crescent City’s Rumiano Cheese Company. According to court documents, the Creamery owed Rumiano nearly $1.2 million at the moment bankruptcy was declared. “We’re just business as usual,” said Baird Rumiano, the company’s owner, on Tuesday afternoon. “It’s not helping us in any way, but we’re a very conservative company and we’ve been in business for 90 years.” Rumiano said that he was most concerned for the dairymen of the Eel River Valley, whom he knows to be a staple of the Humboldt County economy.

But bankruptcy does have its upsides. The immensely complex Pacific Lumber Chapter 11 crash-and-burn lasted a year and a half; there’s every reason to believe that the Creamery’s time in the dock will be much shorter. The milk market isn’t going away, and there seems to be no reason why the court wouldn’t permit the company to operate in the interim, providing some sort of market for local dairies. Whether it remains in local hands or not, the Creamery could well emerge from court as strong an entity as when it went in.

What’s still uncertain is how much of the Creamery’s troubles are structural and endemic, and how many due merely to the shenanigans presumably pulled off by former CEO Rich Ghilarducci, who lawyered up and fled town a couple of months ago, apparently providing the remaining Creamsters with their first clue that something was wrong. It’s now widely understood that the Creamery’s balance sheets, so sunny for so many years, are badly off. Obviously. But how deep did the book-cooking run? Now that the case is in court — and since a criminal indictment apparently could be forthcoming — the public stands a better chance of getting answers.

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