Mayor says Haag Food closing in Breese; distributor employs 70-plus

A food distributor in Breese that employs more than 70 people is closing, according to the mayor.

Haag Food Service was founded in 1944 and provides food products to various fast-food restaurant franchisees. A bank has alleged that Haag owes about $7.9 million on a revolving credit loan and is in default. Haag and the bank, Midland States, have agreed to put the business under control of a third party, which was selected by the bank.

“I was told that the employees attended a meeting and were told the company was closing,” said Mayor Charlie Hilmes. He said the meeting took place Tuesday night.

A woman who answered the phone Thursday at the company declined comment, and said no company leaders were available for comment.

Haag owes the city about $550,000 in economic-development loans. The loans were administered through the state Department of Commerce and Economic Opportunity.

“The city hopes to find another tenant in the long range,” Hilmes said. “The DCEO loans will be in default at the end of January. The city, working with the state, will take all actions necessary to try and recover these funds.”

Haag has a 110,000-square-foot warehouse for frozen, refrigerated and dry goods located on Old U.S. 50.

The company boasts that it serves customers in nine states in the Midwest, including chain and independent restaurants, delis, grocery stores, government commissaries and school districts. The company’s website states that its customers include KFC, Taco Bell, Sonic, Lee’s Famous Recipe, Honey Baked Ham, Quiznos and Wing Stop restaurants.

Midland States Bank filed suit against Haag in December in St. Louis, saying the company owed about $7.9 million in principal and interest on a loan that was originally made in 2005 but was modified more than 15 times. The suit asked for appointment of a receiver to take control of the business and its property.

In a consent order approved Dec. 18, the parties agreed to the appointment of Harmon Group Inc. of St. Louis to take control of the Haag property as well as any property listed as collateral in the loan. The appointment of the third party is necessary “to prevent waste and irreparable destruction and dissipation” of the Haag property and the collateral, according to the agreement.

The agreement gives Harmon Group the authority to operate the business and control its accounts and profits and “have final say in all business decisions.”

This story was originally published January 22, 2016 at 3:14 PM with the headline "Mayor says Haag Food closing in Breese; distributor employs 70-plus."