A longtime snack company owned by a Latino family that encountered financial issues during the coronavirus pandemic was forced out of business in 2021 due to unfair business practices by their bank, a new lawsuit alleges.
Jorge and Elizabeth Barraza brought the Los Angeles Superior Court lawsuit on Feb. 3 against City National Bank through their company Mr. Nature, alleging misrepresentation, fraud, negligence and unfair business practices. The suit seeks unspecified damages.
City National Bank declined to comment since the case is in litigation.
Mr. Nature was a successful and growing minority-owned, community-based business in Cerritos that was part of the Southern California community for 40 years, providing healthy snack foods to the Army, colleges and other major customers nationwide, the suit states.
“This all ended when CNB, the largest bank in Los Angeles County, turned on its loyal, long-time customer and put (Mr. Nature) out of business without warning,” the suit states.
Mr. Nature began banking with CNB in 2015, the suit states. As the business became more profitable, CNB actively encouraged the company to consider the bank as a trusted partner, according to the suit.
However, in March 2020, CNB placed Mr. Nature’s accounts in the division responsible for collections and foreclosures, even though the company had never been in default, the suit states.
Like many businesses, Mr. Nature was hurt by the pandemic and faced cash flow problems. A bank representative recommended that Mr. Nature start overdrafting its checking account, allowing CNB to charge between 10% and 18% interest on overdrafts, plus an additional $37 charge per transaction, the suit states.
Nearly two years into the pandemic, Mr. Nature was poised to become competitive again, but on the day before last Thanksgiving, the bank cut off the firm’s overdrafts, disregarding the previous representations of a bank official, according to the suit.
“This caused an immediate default in (Mr. Nature’s) credit relationship,” the suit states. “It would have required (Mr. Nature) to pay down a balance of nearly $200,000 immediately, which was impossible.”
As a result, Mr. Nature had to lay off all of its staff without severance pay, including some who worked there for more than 20 years, and close its doors, the suit states.
“CNB destroyed a 40-year-old, family-owned, business … effectively overnight,” the suit alleges.
Latino Family Blames Forced Business Closure on Bank’s Business Tactics appeared first on maserietv.com.