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Farmers who got VeraSun letters urged to reply
Farmers who sold corn to bankrupt ethanol producer VeraSun Energy Corp. are being urged to respond to official letters demanding most of the money back. Nebraska Attorney General Jon Bruning says farmers might be able to fight VeraSun's creditors, but they must respond to the settlement offer they received by the court deadline of Sept. 30. Farmers who were paid by VeraSun in the 90 days before it filed for bankruptcy protection in 2008 received the letters demanding they repay 80 percent of what VeraSun paid them for their corn. State Sen. Annette Dubas of Fullerton says farmers should consult an attorney to see if they qualify to keep the money under bankruptcy law. Creditors are in charge of the remnants of Sioux Falls, S.D., based VeraSun.
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Wait a minute. Am I reading this right?

Farmers sold their corn to Verasun and now they are supposed to payback 80% of what they received for the corn? Is Verasun going to return 80% of the corn?

Unless I missed something, there is something wrong with this picture.
 
At issue is the "90 day preference rule" in bankruptcy. Any action by a creditor to "better their position" within 90 days before a bankruptcy is deemed a "preferential transfer" and is subject to being voided by the court.

That being said, there are many factors that have to be evaluated to see if it truly is a preference. Depending on the timing, you may be saved by filing a crop lien. Affected growers need to get a lawyer who knows bankruptcy and crop liens, PRONTO- Preferably, several farmers who are similarly situated should go together on a lawyer, to reduce costs. DON'T go to your local lawyer- his lower hourly rate will be more than offset by the fact that he won't know what he's doing. Find a big firm that has attorneys who know agricultural law. Do it TODAY- because you may already be up against deadlines that you don't even know about.
 
That's right! I live about 10 miles away from an ethanol plant involved in this. I'm not a farmer but the local newspaper had a front page article about this.
 
It is in bankruptcy law, because some, knowing they are going belly-up, will pay their friends, and not other creditors, near the end. B judge can go back 90 days from date of filing, and get money back, which then goes into the asset pool, and redivided, to pay all creditors, including the new ones, who gave the money back. Worst case I"ve seen was in "94- first year combining corn for this older farmer- dried and stored at a neighbor"s business. Needed corn for his livestock, could not get his out, and still had to pay drying and storage bills, since they were assets to the bankruptcy. Pretty hard for an honest farmer with only a few years education to swallow that one. I used to store corn/beans there, but built enough bins to store at home, and that year I farmed fewer acres and had some bins empty, but they seemed cheap protection, sitting empty.
 
Wow!!! I never knew they could do anything like that. I guess even though I'm younger, I'm still old school. My thoughts have always been it's mine until you pay for it in full, then it's yours and I have nothing to do with it anymore.
Guess things are different than I thought.
 
Agreed.

Crooked business owners try this all the time. They pay specific creditors in full while leaving others high and dry. Imagine if none of the farmers were paid for their crops but found out the owner's son who worked as a "consultant" was paid in full for his "work".

Really crooked ones go much further. Back in the dark days of the 1980s I remember on farmer paying a "buddy" over $100,000 for harvesting shortly before going bankrupt. Eventually the buddy admitted he didn't combine anything but was holding the money until the farmer was through bankruptcy and would pay him back. Screwed everything up when the "buddy" went bankrupt too.
 
My understanding is that yu need to claim this is a regular business transaction, not a 'special payment'.

If it's regular business transaction it should be ok. What isn't ok is if you got a special payment outside of ordinary payment, then it would be recalled because all people owed money should be treated the same.

But, with the notice, you are assumed 'guilty' now and need to prove yourself, so it's not something to ignore!

--->Paul
 
Hi Mike (WA): There was a news story on Sioux Falls KELO-TV yesterday in which many farmers were gathered together to seek legal information as a group. There likely is a LINK on the KELO-channel 11 website... or maybe call them. The Sioux Falls news paper Argust(sp) Leader should also have a story on what farmers in the area are doing to share legal help, because farmers must reply. good luck. ag
 
My sister worked for Enron during it's collapse. After a few years, she received a check in the mail for about $15K as a post-bankruptcy settlement. She cashed it and soon got a letter from a lawyer saying they wanted it back.
She never did send any of it back and she still is getting threatening letters.
They'll have to take her to court.
 
My understanding is that yu need to claim this is a regular business transaction, not a 'special payment'.

=================================================

For the most part that is correct. But if your normal way of doing business was to not pay people, why did only specific creditors get paid?
 
Sounds like they were payed in advance if so they owe the money actually not bad if they still have the crop and were getting 20% of it. Now if the company has the corn well that's another story.
Walt
 
I agree with that. If they took your corn and paid you for it, it should be their problem, not yours. If the farmers would have known the place was going bankrupt, they would have never taken their corn there in the first place. The farmers shouldn't have to suffer because the other place is.
 
In bankruptcy procedures it is somewhat common to have your receivables audited by the company that is in bankruptcy, if you are a supplier/vendor to them. (and you may have to legally give back part of the money)

It sounds real dumb.....But the law is not always thought through with common sense.
 
Remember about ten years ago a farmer paid the local elevator to store his bean. While the beans were there the elevator co. went bankrupt and the judge said all the beans would be sold to pay the creditors. Farmer and others howled that the beans were not the property of the elevator they had been paid to store them, the beans were the property of the farmer. Judge disagreed. Farmer took his truck to the elevator broke off the lock and took his beans home. He got thrown in jail. The analogy was made of a guy paying to park his car in a parking garage and before he gets back the garage declares bankrupcy and the judge rules the cars will be sold to pay the garages creditors.
 
Dana corporation filed last year and they have a large plant here in our local county.. The local electric utility had to refund the last 90 days of electric bills over 120 thousand that our utility had to come up with.. bad thing is we purchase the power from Tennesse Valley Authority and they did not have to give back the money local utility paid them. This bankrupsie thing can get wild.
 
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