A Long Island olive importer is asking a bankruptcy judge to decide how much it owes customers for allegedly selling processed olive oil as pure.
Kangadis Food Inc., which is fighting claims that it improperly marketed a chemically treated olive byproduct as “100% pure olive oil,” recently sought bankruptcy protection in an attempt to put the brakes on a class-action suit over the alleged mislabeling.
The family-owned company filed for Chapter 11 Friday in U.S. Bankruptcy Court in Central Islip, New York, saying the approximately $1.4 million in legal fees it has racked up over the past year and a half have hurt what is otherwise a profitable business.
The goal of the filing, according to Kangadis Food’s bankruptcy lawyer, is to avoid paying an estimated $750,000 to $1 million more to defend itself in a class-action suit scheduled to go to trial in September. Under the Bankruptcy Code, a company can ask the bankruptcy court to estimate the damages that it would incur in a civil suit, in lieu of litigating the case to its conclusion. That estimation is then used to create a creditor-repayment plan in the bankruptcy.Olive Importer Files for Bankruptcy to Avoid Class Action,