Loleta cheese factory may close down due to crippling debt

Layoff notices issued Monday to most employees

The Loleta Cheese Factory has been in business for nearly four decades. The long-time buisness is in foreclosure. (Ruth Schneider — The Times-Standard)
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For decades, the Loleta Cheese Factory has provided artisanal cheese to a host of Humboldt County grocery stores, but the family-run factory now stands to close down, which would cut jobs to more than a dozen employees.

Owner Bob Laffranchi, who started the business with his wife Carol in 1982, said mounting mortgage costs have stuck the company with more than a half-million dollars in debt. For months, he resisted letting anyone go, but issued layoff notices to most of them today as end times loom.

Last December, Umpqua Bank raised its loan interest rates for the factory meaning several thousand dollars more in payments, which Laffranchi said put the company in a crippling financial bind. Now the bank plans to auction off parts of the factory on Friday and begin a 30-day foreclosure period for the property where the owners both run the factory and reside.

“Our economy this year has not been as strong as it was in years past,” said Bob Laffranchi. “The honesty is, yes, after the bank raised its interest rates, we stopped paying them — that’s my fault. We’re not innocent. But at the same time, 30-some years of making those mortgage payments is something, too.”

The factory stopped producing cheese in October. It’s currently selling off what’s left of its limited cheese supply. With more than $576,000 in outstanding payments due, Laffranchi acknowledged his options are limited.

Nevertheless, the family says it’s in talks with Rep. Jared Huffman’s local district office and 1st District Supervisor Rex Bohn, asking the representatives to engage Umpqua Bank on a possible extension of the owner’s deadlines.

Reached Monday, Bohn said he had just left a meeting with state Sen. Mike McGuire, where he took a moment to raise the issue of the factory’s closure.

“We’ve been going back and forth (with Umpqua Bank) and they’re non-committal, but I think they’re willing to work with us,” Bohn said. “When you’re falling backwards in business, there’s nothing harder in the world than trying to make it work.”

A representative from Umpqua Bank declined to comment on this story. A representative from Huffman’s local office declined to confirm if the congressman’s staff is looking into the matter.

Bob Laffranchi, owner of the Loleta Cheese Factory, stands with longtime employee Shirley Ogden at the shop on Monday. The business is in foreclosure and could hit the auction block on Friday. (Ruth Schneider — The Times-Standard)

Michelle Laffranchi, the owners’ daughter, said she had been “crying off and on” when reached Monday morning. She grew up at the factory. Her parents still live upstairs.

“When the interest rate went up by so much, my parents should’ve ran off and retired,” she said. “But they wanted to keep people employed. They’re good people.”

In September, the historic Benbow Inn in Southern Humboldt filed for bankruptcy protection after defaulting on a loan from US Bank, though the owners maintained the hotel remains financially secure.

The cheese factory’s owners hope they can reach a similar point of flexibility before it’s officially too late.

“This is going to trickle down to a lot of people, putting all of our employees out of work,” Michelle Laffranchi said. “If we can still buy some time — anything at all — that’s our goal.”

Shomik Mukherjee can be reached at 707-441-0504.

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