H&H owes more than $9 million to Valley businesses

MERCEDES — Local businesses that are owed money by H&H Foods said Monday they hope H&H can continue operating under Chapter 11 bankruptcy reorganization.

H&H owes substantial sums, about $2.7 million, to two Valley banks, Texas State Bank and Rio Bank in McAllen. Federal banking law prohibits the banks from commenting on their customers.

H&H also owes Wells Fargo for a $2.2 million loan.

Of the company’s dozens of creditors, about 80 are located in the Rio Grande Valley and are owed about $673,000.

H&H filed for a Chapter 11 bankruptcy last week, claiming it owed more than $9 million to more than 200 suppliers and creditors, many in the Rio Grande Valley.

A Chapter 11 means the company will “reorganize,” giving it time to repay creditors.

Owners and managers of several Valley businesses said they have counted on the big meat-packing company as a valued business partner for decades, but most would not disclose how much the Mercedes-based meat-packing company owes them.

Bronze Bearing Sales in McAllen is owed about $6,500, according to the bankruptcy filing. The company sells bearings for large equipment, primarily to food manufacturers.

Owner Jesus Valdez said he’s concerned about the loss of a key customer.

“It’s hard because they are one of my big customers,” said Valdez, the company’s lone employee. “I’ve been doing business with them for 12 or 13 years.”

Valdez said H&H actually owes his company about $54,000 dating back to June.

“This has been coming for a while,” he said.

Dr. Benjamin Salinas’ clinic in Mercedes provided medical services for H&H employees, clinic spokesman Frank Salinas said. “Their employees would come here to be treated.

“It’s going to have a small impact but we’re not going to go out of business,” he said, but wouldnot disclose how much H&H owes the clinic.

Sam Davila, of Altra Automation, a small Harlingen company that services automated manufacturing equipment, said he wasn’t aware H&H had filled a bankruptcy petition.

“Oh wow,” he said. “They owe us. That’s going to affect us.”

After checking his records, Davila said H&H does presently owe his company for work and parts on its equipment.

“It’s a couple of grand, but it wouldn’t be more than $2,000,” he estimated. “We did service for them not too long ago. They were taking their time about paying it. Yes, that’s going to impact us. It is going to hurt us.”

A spokesman for Bill Bunton Auto Supply in Mercedes, who declined to identify himself, said the amount H&H owes is not large enough to cause his company major problems.

“Right now, I don’t think it will make a big difference,” he said.

But the spokesman for one Harlingen company who said his company has worked with H&H for more than 20 years, said he is worried about the loss his company may suffer if the meat packer cannot pay what it owes.

“We’re not able to absorb that,” he said. “It is a significantly high balance.”

But the company official said he did not want to be quoted in the newspaper because his remarks might affect how high of a priority his company’s account might receive when H&H does make payments to some of its creditors.

Frank Hale, of Rio Elevator Co., a Harlingen elevator sales and service company, said the H&H bankruptcy won’t hurt Rio Elevator much, but H&H is a longtime valued customer.

“There’s a little bit of an account,” he said. “It doesn’t make much difference. They’ve been great customers. We only have sympathy for them. We hope they can pull through.”

The bankruptcy filing guarantees H&H will make an attempt to repay or negotiate the debt with all its creditors. However, Valdez of Bronze Bearing Sales is worried about the loss in business, he said.

H&H officials didn’t return phone calls seeking information on what led to the company’s financial troubles.

According to a statement released by H&H, “The reorganization plan will help strengthen H&H’s ability to provide quality products and enable them to remain in operation while the Hinojosa family satisfies its obligations to suppliers and creditors and continues efforts to restructure its debt along with the implementation of new internal cost cutting procedures.

H&H Foods, one of the largest businesses in the Valley, manufacturers chorizo and other prepared food products. It was founded in 1947 and has had as many as 350 employees as late as 1995.

For years, H&H Foods was a model story for local and national Hispanic businesses. It garnered several state and national awards and claimed $40 million in yearly revenues in 2005, according to Hispanic Business magazine.