An attorney for Express Grain Terminals LLC says everyone will be better off if the company is allowed to continue operations.
The attorney, Craig Geno, reported, however, that layoffs are expected to begin next week.
During an interview Friday, he also said he concurred with the findings of the Mississippi Department of Agriculture and Commerce that Express Grain had submitted doctored audit reports to the state for three fiscal years.
Geno, whose office is in Jackson, represents Express Grain and its president, John Coleman, in federal bankruptcy proceedings. The company owes more than $156 million to its creditors and has been under the management of an outside consulting group, CR3 Partners LLC, since mid-October.
“I just have to believe,” Geno said, “that it’s in everybody’s best interest for CR3 and Express Grain to finish out the grain that’s there, to turn it into meal, to turn it into soybean oil, and then to find buyers for those products, sell the meal and oil and then collect the proceeds; but there is a lot of winding up that needs to be done.”
Meanwhile, “there are employees we need to take care of,” Geno said. “They have to be given COBRA notification. We have to wind up the retirement 401(k) plan in a sensible, meaningful manner so the employees don’t get hurt. Employees need to get paid their wages.”
The company has approximately 150 employees.
Potentially complicating the gradual shutdown of Express Grain is Thursday’s order by state Agriculture Commissioner Andy Gipson to revoke the company’s licenses for its three Leflore County warehouse facilities. Gipson took that action after finding that Express Grain had submitted fraudulent audit reports to his agency that tried to mask the precarious financial condition.
Gipson said Friday that Express Grain is no longer authorized to operate grain warehouses or as a grain dealer.
When a storage facility loses its license, according to state law, it is required to return the grain to its owners. Determining ownership, though, will be a point of dispute. Express Grain’s creditors, including several financial institutions and more than 200 farmers, have entered competing claims to the bankruptcy court as to who has legal title to the grain.
It is also unclear how much grain the company still has in storage, as it has continued to process soybeans at its crushing plant in Greenwood. As of Dec. 31, the company was storing more than 1 million bushels of soybeans, 123,000 bushels of corn and less than 400 bushels of wheat, according to the latest inventory report on file.
A hearing to determine ownership of the grain and grain proceeds in Express Grain’s possession will be held March 4, Geno said.
He said he is uncertain whether Gipson, like some of Express Grain’s creditors, is pushing for an immediate liquidation of the company.
“We really don’t know what the commissioner’s ideas are about trying to effectuate some kind of shutdown at Express Grain or any other action to take in his ideas as to how to enforce the orders that he’s already entered,” said Geno.
He said federal Judge Selene Maddox, who is presiding over the company’s bankruptcy, said she would entertain injunctive relief should outside parties try to force the company to immediately shut down operations.
Gipson said that testimony provided at a Feb. 3 hearing by CR3’s Dennis Gerrard, who has taken over the day-to-day management of Express Grain, indicated the company had enough grain inventory to continue processing through Feb. 25.
Express Grain has proposed to have its assets sold at auction at that time, Geno said, but the date has not been approved so far by Maddox.
The attorney said he “cannot blame” Gipson for his decision to revoke the warehouse licenses due to the “clear manipulation of financial documents and falsifications” by Express Grain.
“Clearly, the Department of Agriculture has an obligation to review financial material that was sent to it in the granting of licenses and clearly, this material had been manipulated and was false.”
Geno said, however, he does not believe it is in anyone’s best interest to force a closure of the company at this time.
Geno also said that there has been vandalism at Express Grain’s storage facility in Minter City, though it was “nothing too significant.” He said measures to secure that facility and the ones in Greenwood and Sidon are underway.
He added that cleaning up the manufacturing plant, complying with environmental regulations and continuing to manage employees are other reasons the company needs to stay open.
“I’m cautiously optimistic that we’re going to be able to finish the manufacturing process, sell the mill and oil, collect for that, put that money in escrow like we’ve been doing all along,” he said.
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com.
