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NEW YORK - A number of produce and packaged food providers to Fleming Cos Inc. on Thursday said the bankrupt grocery distributor could not use the money they are owed, citing a Depression-era law.
The vendors maintain that Fleming cannot use the money it owes them because the Perishable Agricultural Commodities Act of 1930 says the funds are to be held in trust.
Michael Keaton, of Keaton & Associates, attorneys for the food providers, said the amount of money they are owed could be as much as $100 million, Reuters reports. The figure is still being calculated.
"They're literally holding onto someone else's money," Keaton said.
Neither attorneys for Fleming nor the company itself could be reached by Reuters for comment.
Dole Fresh Fruit Co. Inc., Cavendish Farms, Continental Tomato Packers, DiMare Fresh Inc., TAM Produce and Weis-Buy Farms are among the food companies that objected to Fleming's motions to use its cash as collateral for credit or for general business, according to a filing in Delaware Bankruptcy Court.
Both sides have agreed to let the matter stand for 14 days to give the company time to obtain post bankruptcy petition financing and settle on terms, including setting aside enough money to repay mutually agreed-to claims made by the food providers, Keaton said.
In other Fleming news, the company on Thursday announced that it had been notified that the New York Stock Exchange (NYSE) has suspended trading in Fleming common stock and that an application to the Securities and Exchange Commission to delist Fleming common stock is pending the completion of applicable procedures, including any appeal by Fleming of the NYSE staff's determination. The company has taken the NYSE appeal procedure under advisement. Trading of Fleming common stock has also been suspended on the Chicago Stock Exchange and the Pacific Stock Exchange.
Fleming common stock is now trading in the Pink Sheets, a centralized quotation service that collects and publishes market maker quotes in over-the-counter securities.
Fleming said it plans to ask the Over-The-Counter Bulletin Board (OTCBB) to review the company's eligibility for trading on the OTCBB. However, the company believes it will not be eligible for trading on the OTCBB until it files its Annual Report on Form 10-K for the fiscal year ended Dec. 28, 2002 with the Securities and Exchange Commission.