MINEOLA, N.Y., Sept 4 (Reuters) - The privately held U.S. producer of AriZona iced tea might face insolvency if the judge overseeing a dispute between its founders sets its value at $3 billion or greater, a lawyer for the co-owner running the company said Thursday.
During closing arguments in New York state court, Louis Solomon, an attorney for Beverage Marketing USA Inc co-owner Domenick Vultaggio, said the AriZona beverage maker should not be forced to buy out estranged business partner John Ferolito based on "la la land" numbers.
"I do not want to find myself in bankruptcy court," Solomon told a judge.
The closing arguments capped a valuation trial to determine how much Vultaggio and Beverage Marketing must pay to buy the 50 percent stake held by the Ferolito and his son's trust.
Nicholas Gravante, Ferolito's attorney, countered the company has many suitors willing to pay billions of dollars, including Tata Global Beverages Ltd, Nestlé SA and Coca-Cola Co, among others.
While the company's valuation will be determined as of 2010, Gravante said a sale based on AriZona today could easily fetch $6 billion.
"Everybody wants a piece of this company," he said.
Based in Woodbury, New York, Beverage Marketing and its related companies have 1,000 employees and annual sales of $1 billion, Solomon has said.
AriZona had a 37.4 percent share for U.S. ready-to-drink tea by case volume in 2013, according to Beverage Digest, ranking No. 1 above PepsiCo Inc's Lipton and Coca-Cola.
The non-jury trial before state Supreme Court Justice Timothy Driscoll followed six years of litigation between Ferolito and Vultaggio, onetime friends from Brooklyn who launched AriZona in 1992.
The partners in 1998 agreed to restrict the transfer of company stock to outsiders. But by 2005, Ferolito wanted to sell his stake and began pushing for a corporate sale.
After Vultaggio, its chairman, refused, Ferolito asked a court to declare the stock sale restrictions unenforceable.
Following unfavorable court rulings, Ferolito filed a lawsuit to dissolve Beverage Marketing. Vultaggio later elected under state law to buy out his partner.
Later court rulings allowed Beverage Marketing itself to buy Ferolito's stake. The trial covers all AriZona entities.
Solomon, who argues the company is worth just $426 million, said Ferolito's multibillion dollar valuation wrongly assumes continued growth and ignores increased costs.
"That's not grounded in reality," he said. "It's grounded in fantasy."
But Gravante, Ferolito's attorney, said his expert's analysis along with one Morgan Stanley conducted for management in 2010 showed the company was worth at least $3 billion.
"Now we have to get this family out of this company," he said.
Driscoll has said he will rule by Oct. 13.
The case is Ferolito v. AriZona Beverages USA LLC, et al, New York Supreme Court, Nassau County, No. 004058-12. (Reporting by Nate Raymond in New York; Editing by Tom Brown)