A federal bankruptcy judge on Monday approved the settlement regarding ownership of the grain assets in the possession of Express Grain Terminals LLC.
In her order, Judge Selene Maddox said she found that “the settlement is in the best interests of the creditors with deference to their reasonable views and that the settlement is a product of arm’s-length bargaining rather than of fraud or collusion.”
The judge’s decision was first reported by The Taxpayers Channel.
Click on Title To Read Document
Since Express Grain filed for bankruptcy in September, two sides have been vying for the rights to about $57 million held in segregated bank accounts. The money was generated through the company’s processing and selling of grain products.
Farmers, and their production lenders, have argued in court that they were never paid for grain delivered to Express Grain and that the money is theirs.
Three large companies — UMB Bank, StoneX Commodity Solutions and Macquarie Commodities — have argued that Express Grain sold the rights to the grain to them to secure financing.
“None of the parties to the Settlement Agreement assert that they substantively oppose the Settlement Agreement as not being in the best interests of the creditors and the bankruptcy estate,” Maddox said.
In the negotiated settlement, farmers were given three choices:
nJoin the settlement and take a piece of approximately $9.2 million in what is called the “consenting farmers’ share.”
nDisclaim interests in the grain assets, get attorney fees paid and attempt to find relief in other forums.
nContinue the fight in the bankruptcy proceedings for the money the farmers argue they should receive.
UMB, StoneX, and Macquarie would split the remaining $48 million.
Farmers made their choices on election forms and submitted them to the court.
Disclaiming farmers later objected to the settlement’s wording, asking for language to be inserted that protected their legal claims in other causes of action, specifically a class-action lawsuit against UMB Bank, Express Grain’s largest creditor.
Maddox rejected the argument that these farmers can change their choices because they believe it may affect their lawsuit. She said they reviewed the offer on the table, consulted with their legal counsel and chose to accept it.
She added that none of them raised objections at the time the settlement was presented and that they made their choices clear on their submitted election forms.
She also explained the potential costs and complications of the “final determination trial,” which was scheduled before the settlement was proposed.
Dennis Gerrard, Express Grain’s chief restructuring officer, testified before the court on April 25 that the costs of pursuing such a trial could reach $60,000 per day just on legal fees. On top of that, the time reviewing objections alone could cost at least $2.4 million.
As for the impact of a farmer’s settlement choice on other litigation, Maddox said that is beyond the scope of the bankruptcy court.
“Any potential legal effect of this settlement on pending or future litigation in another forum,” she said, “including any administrative proceedings, is not for this Court to determine as such litigation and administrative proceedings fall outside of this Court’s limited jurisdiction.”
- Contact Kevin Edwards at 662-581-7233 or kedwa-rds@gwcommonwealth.com.
