A bankruptcy judge cleared creditors of Michigan honey supplier Groeb Farms Inc. to vote on the company's restructuring plan, which would see it emerge from Chapter 11 protection under the ownership of a private equity firm.

At a court hearing Friday, Nov. 8, Judge Walter Shapero of the U.S. Bankruptcy Court in Detroit said that the company's 72-page description of its bankruptcy-exit plan contains enough details to inform the company's creditors who have the power to vote on the plan--including vendors owed $14.5 million who are set to recover 10% of their claims, according to a recording of the hearing. Judge Shapero also set a Dec. 19 confirmation hearing to look over the voting results.

Under the Chapter 11 plan, Texas investment firm Peak Rock Capital would take control of Groeb Farms after extending a $30 million bankruptcy loan to the 76-worker company, which filed for bankruptcy protection after regulators caught it illegally buying Chinese honey through other countries to avoid antidumping tariffs. That bankruptcy loan was designed to pay off the balance remaining on a $25 million bank loan that Peak Rock Capital bought from Wells Fargo Bank and to provide money for the company to keep operating during the Chapter 11 case.

The bankruptcy-exit plan would enable three private equity firms that extended another $7 million to remain the company's lenders but with new terms that weren't disclosed in court papers. Unsecured creditors would recover 10% of the amount they are owed, and the company's current owners--mostly individual investors--would be wiped out.

The company filed for Chapter 11 protection on Oct. 1, blaming financial troubles that hit after Groeb Farms was accused of buying Chinese honey through other countries to avoid antidumping tariffs imposed by U.S. trade regulators in 2001. The bankruptcy filing halted several lawsuits filed earlier this year by honey producers and distributors that said they were harmed in the scandal.