In a battle for market supremacy against America's wealthiest farmer, Stewart Resnick, the Assemi family pursued a covert plan called "Project X" that ultimately led to their $700-million default, alleges a U.S. Bank court filing from Tuesday.
The Fresno family, led by brothers Farid, Darius, and Farshid Assemi, is attempting to avoid receivership by negotiating a consensual Chapter 11 bankruptcy with U.S. Bank and Prudential that would sell off 50,000 acres of farmland and other assets, according to the US Bank filings. On Tuesday morning, according to U.S. Bank, the family's pistachio company had only $91,465.23 in its bank account – not even enough to pay its workers this week.
Darius Assemi, in a statement on GVWire, which he also publishes, did not mention bankruptcy plans. Instead, he said that the family still hopes to refinance its loans, after defaulting on more than $700 million over the last year. He has not responded to questions or requests for clarification from Fresnoland. Brothers Farid and Farshid Assemi could not immediately be reached for comment by telephone at Assemi Group headquarters.
“After months of effort and good-faith negotiations by all parties, two banks could not agree on a financial restructuring. However, we’re still hopeful a resolution can be achieved,” Darius Assemi said in the GVWire post.
“In football terms, we’re at the 1-yard-line but disagree on the remaining technical details.”
The new filings in U.S. District Court for the Eastern District of California detail the lead-up to the family's default, with a failed effort to build a rival pistachio plant at the heart of their woes. In spring 2018, Farid Assemi, the main dealmaker among the brothers, failed to renegotiate a $75-million loan with Resnick.
Fifteen months later, he told Resnick that the family would build the world's largest pistachio plant in west Fresno County. Resnick, whose control of the market relies on a 65% share of California's pistachio supply, allegedly told one brother "You're fucked" soon after, eventually thwarting the family's Fresno County project with a huge environmental lawsuit filed in 2020.
The new court filings allege another wrinkle in the power struggle not mentioned in previous lawsuits between Resnick and the three brothers: the Assemi family continued their expansion efforts in “secret” in Tulare County to avoid further interference from Resnick's Wonderful company. In spring 2022, they entered into a complex loan arrangement with Prudential Insurance Company, the family's main real estate lender, to finance the expansion of an existing third-party plant, Dry Ranch, in a small Tulare County town called Terra Bella, with plans to purchase the facility upon completion.
The plan involved a daisy-chain of loans, with Prudential Insurance loaning Maricopa, the Assemi's main farming operation, $50 million secured by its orchards. Maricopa would then loan that money to Touchstone, another Assemi company intended to rival Resnick's Wonderful, which would use it to help fund the construction loan to Dry Ranch for Project X.
According to the filings, the family planned to move equipment from their blocked Fresno County facility to the new plant after completion – a move not permitted under their existing loan agreement with U.S. Bank, as the equipment served as collateral.
"Touchstone did not pursue the matter further with U.S. Bank. Instead, it went ahead with its Project X plan without the bank's knowledge or consent," the filing said.
In 2022, a combination of factors, including a poor pistachio crop, rising interest rates, heavy leveraging, and supply chain issues, left the Assemi businesses in a precarious position. Despite these challenges, they forged ahead with their aggressive expansion plan.
Ultimately, construction delays and cost overruns, coupled with the collapse of anticipated Prudential refinancing, led to Touchstone, one of the family's agricultural companies, defaulting on its loans and losing its interest in Project X by the end of last year.
As of March 5 this year, the company began accruing interest on the equipment portion of the U.S. bank loan, with a total loan default of $72 million.
"The Assemi brothers gambled their companies, their creditors, and their own financial futures on Project X – and lost," the filing stated.
As harvest begins, the family is in urgent need of outside funding to continue operations, according to the filings. Without a receiver, U.S. Bank warns it will "turn off the spigot" of cash collateral by directing customers to pay invoices directly to the bank, likely leaving Touchstone unable to continue.
Assemi, in his post, said that Granville Homes is independent of the family’s agricultural operations, and doesn’t expect for their homebuilding business to be affected. He did not mention GVwire.
The case could have far-reaching implications for the region's agricultural economy and the many businesses and workers who depend on it. This is the second major Fresno-area farming family to have serious financial issues in the last year. The former holdings of Prima Wawona, formerly owned by the Smittcamp family, went bankrupt after a private equity takeover. Another nut company, Trinitas, has gone bankrupt recently as well.
This article first appeared on Fresnoland and is republished here under a Creative Commons license.