A Brooklyn wholesale produce and fruit distributor has agreed to pay Endico Potatoes Inc., of Mount Vernon, $1.47 million for goods delivered but not paid for years ago.
L. Dontis Produce Company Inc. received perishable products from September 2019 to February 2022, according to court records, but refused to pay a balance of more than $1 million.
Then in Febuary 2022, L. Dontis filed for Chapter 11 bankruptcy protection in Brooklyn, declaring only $14,925 in assets and $157,600 in liabilities.
The wholesaler had grossed more than $3.8 million in 2019 and nearly $2.1 million in 2020. But the business developed cash flow difficulties, according to a declaration by James G. Koutsodontis, the president, defending itself in a lawsuit filed by the operator of the Brooklyn Wholesale Meat Market where L. Dontis had a stall.
The petition did not list Endico Potatoes as a creditor.
Endico responded by suing Koutsodontis and his business in U.S. District Court, White Plains, citing the bankruptcy case as proof that they were liable for the potato payments.
(Endico sells more than potatoes. L. Dontis shipments, for example, included products such as beer battered onion rings, breaded mozzarella stix, and broccoli spears.)
Both businesses are licensed by the U.S. Department of Agriculture and subject to the Perishable Agricultural Commodities Act. The law requires merchants to hold perishable agricultural products in trust until full payment is made.
Koutsodontis, as president of L. Dontis, had declared in the bankruptcy case that the business had no assets.
That admission, Endico argued in the federal lawsuit, proved that Koutsodontis had not preserved assets and therefore was personally liable for the payments.
Endico claimed that he had used PACA trust assets for personal expenses, including a mortgage payment on a home and for an automobile loan.
Koutsodontis broadly denied the allegations in his formal answer to the complaint.
Last October, he filed a personal Chapter 11 reorganization petition in Brooklyn bankruptcy court and declared $1,637,585 in assets and $384,560 in liabilities.
This time he attributed severe cash flow difficulties to having to defend himself in the Endico lawsuit.
Endico sued Koutsodontis in bankruptcy court this past February, arguing that he should not be allowed to discharge debts because he had intentionally dissipated PACA trust assets.
He had structured his affairs so as to avoid paying claims, according to the complaint, transferring assets, for instance, from L. Dontis to another business.
He “ceased operating Dontis on a Friday,” the complaint states, “and began operating in his present place of business on the following Monday.”
Koutsodontis denied the charges and argued, in part, that the claims were barred by the statute of limitations.
Then on May 16, fourteen days before the federal lawsuit was set for trial, L. Dontis agreed to pay Endico $1,470,062 in exchange for release from all alleged claims.
