NutraCea Prepares to Exit Chapter 11

PHOENIXNutraCea (OTCBB: NTRZ) announced the company and its Official Committee of Unsecured Creditors filed a proposed plan of reorganization with the Bankruptcy Court on June 24; the plan is a step toward existing the Chapter 11 bankruptcy protection it entered in November 2009. W. John Short, chairman and CEO, NutraCea, said company management spent considerable time negotiating terms of the plan and hopes to redirect their efforts toward increasing sales and completing programs that will allow the company to pay its creditors.

The filing came just two weeks after NutraCea announced the U.S. District Court, District of Arizona, granted preliminary approval of the settlement of a securities class action lawsuit that was pending against NutraCea and certain of its former officers and directors; the claims were also filed in the U.S. Bankruptcy Court. Both the Bankruptcy Court and District Court must approve the settlement; a hearing in District Court is set for Oct. 1. Anyone who purchased NutraCea shares between April 2, 2007 and February 23, 2009 may be entitled to a share of the settlement. Short said the company is optimistic the lawsuit will be fully resolved by that hearing.

Since the November Chapter 11 filing, NutraCea has offloaded several business units considered tangential to its core focus on stabilized rice bran (SRB) production technology and products. In March, the company completed a $3.9 million sale of its cereal ingredients business and certain related equipment to Kerry Inc., effective March 9, 2010. And in April, NutraCea sold its Natural Glo, Satin Finish and Max-E-Glo equine brands and related intellectual property to Manna Pro Products LLC (Manna Pro) for around $750K.