A number of parties have objected to Express Grain Terminals’ request for a loan, and an ongoing investigation into its license renewal could put its bankruptcy proceedings and continued operation in doubt.
Objections were filed Wednesday in the U.S. Bankruptcy Court of the Northern District of Mississippi. Express Grain is asking for a loan of up to $30 million from its bank and primary creditor, UMB Bank, to purchase grain and continue business.
The objections came from a variety of entities, including the Mississippi Department of Agriculture and Commerce and three groups of farmers.
MDAC opened an investigation Monday into Express Grain’s 2021 renewal of its license to operate its grain warehouses. The department alleges the company filed a fraudulent audit report in its application earlier this year with the intent to misrepresent its financial position.
“If the Debtors,” meaning Express Grain, “do not have valid Licenses, they cannot operate as a Chapter 11 debtor-in-possession,” the objection reads.
MDAC asks the court to deny the loan request “even on an interim basis so as to avoid any further immediate and irreparable harm to farmers and their production lenders.”
The objection requests time to investigate Express Grain’s license applications for this year and other years. It states that should an investigation show that the company did falsify documents, the department could suspend, revoke or cancel Express Grain’s license to operate its warehouses.
A potentially falsified license would also bring into question the liens that UMB Bank holds on Express Grain property and assets, the department says: “If the Debtor operated without a valid License, pre- and post-petition, the Court should not grant UMB a continuing lien on collateral that may have been obtained by fraud.”
A second objection filed by “Farm Group I,” which includes more than 40 farmers, refers to the objection made by MDAC and asserts that the investigation proves Express Grain committed fraud against the farmers. It describes Express Grain as “a hopelessly insolvent debtor, with no money, no stated reorganizational purpose, and no real prospects of any purchaser for its assets.”
Their objection states that the loan should be denied because Express Grain “is out of money” because crushing operations have not been profitable.
It additionally states that had Express Grain told the truth about its troubled financial condition when it applied for its grain license in May, MDAC would have shut down the company, and the farmers would not have delivered their crops there.
The farmers group asks that the court not allow Express Grain to receive a loan “to operate a business that is out of money and will likely be quickly shut down by the department.”
Express Grain owes an estimated $110 million to UMB Bank and more than 200 farmers.
It has worked on restructuring for several months, arguing in court filings that remaining in business is in the best interest of all parties.
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com.
