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OAKLAND – A proposed settlement would allow more than 500 farmers to escape $350 million in potential damages linked to the bankruptcy of canned fruit and tomato processor Tri Valley Growers. 

The deal, made public Wednesday, comes after negotiations between unsecured creditors and the growers. 

The proposal calls for the unsecured creditors, who filed the suit in U.S. Bankruptcy Court in Oakland, to pay the attorneys fees the growers incurred in defending the suit. The growers would then move forward with their suit against former Tri Valley Chief Executive Officer Joe Famalette, the board of directors and Deloitte & Touche, the co-op’s accounting firm. 

The unsecured creditors would then receive 70 percent of any money awarded to the growers, after attorney fees and court costs are paid. 

The unsecured creditors also would obtain the right to sue the same parties for activities that occurred in 1998 and after. 

The growers would also abandon claims for money owed for crops delivered to the co-op after it filed for bankruptcy. 

“Once the growers read and understand the settlement, I’m confident they’ll approve,” said Roger Schrimp, a Modesto attorney representing some growers in the lawsuit. “The growers have been sued for such an enormous amount of money that the cost of defending themselves would be horrendous.” 

Growers have until July 24 to object to the settlement, which was filed June 26 in U.S. Bankruptcy Court. 

Attorneys representing the hundreds of unsecured creditors could not be reached Wednesday. 

Tri Valley Growers is one of the nation’s biggest canned fruit and tomato processors. The collapse of the 68-year-old co-op, which had been losing millions of dollars for the past three years, left tomatoes rotting in fields this summer and forced some farmers to bulldoze their fruit trees to cut their losses. 

An Aug. 7 hearing has been scheduled before Judge Edward D. Jellen.