Representatives of financially crippled Knudsen and its chief creditor Citicorp were locked in daylong negotiations Friday, trying to work out details of what may be the final days of the West's largest dairy.
Knudsen on Friday told several customers, including the Los Angeles Unified School District and the Stater Bros. market chain, that it will stop delivering milk and other products by the weekend or early next week. On Thursday, many of the state's dairy farmers stopped shipping milk to Knudsen after the company said it could not pay them.
Knudsen Chief Executive John P. Brincko testified in bankruptcy court Thursday that the ailing dairy did not have the money to continue operating beyond Friday night.
Bankruptcy Judge Barry Russell denied Knudsen permission late Thursday to take a $5-million loan from Los Angeles-based Foothill Capital, which would have had to be repaid ahead of Knudsen's other creditors under terms of the loan. Citicorp, which is owed $155 million and has been keeping Knudsen operating with weekly cash infusions, objected to the new loan.