Bankrubsy court order to return payment for cattle.

IOWA NORTHEAST · Nov 9, 2010

In Postville Iowa (Northeast Iowa) where the largest immigration raid took place, the packing house is in bankrubsy court now. A good friend of mine told me today that he got a letter saying he had to send them $60,000.00 for payment of cattle he had received in the last 90 days prior to the filing.

He said a cattle buyer had told him there was a better place to unload his cattle after the $60,000.00, or otherwise he would have been sunk a whole lot deeper.

Oh yea, he is ticked off, and wonders if the judges and attorneys will forfeit their pay checks in the name of justice.

Any idea what he can expect? He said either way he will probably have to get a attorney and start tossing dollars at him. I guess my thinking is to have a few folks hire the same attorney??????

And who knows? He may get all his $60,000.00 back plus interest, and a Christmas present to boot.

Tom-TX · Nov 9, 2010

I must be having a senior moment, but I cant figure who got a letter from whom, or who owes the 60,000 to whom. Just cant follow. Tom

IOWA NORTHEAST · Nov 9, 2010

Sorry it has been a long day!

The farmer must send the money to the courts for cattle he had sold (and was previously paid for). So he had recieved payment for cattle he had sold 90 days before the packing house filled.

Now the judge says he has to do this or else.

Tramway Guy · Nov 9, 2010

I once worked for a company that filed for bankruptcy. Any monies that vendors collected in the previous 90 days was subject to recall. Vendors got a letter similar to the one you are talking about.
The reason is to prevent preferential treatment; in other words some people (perhaps 'friends' of the bankrupt company's accountants) got money before other more deserving. The money repaid to the court was lumped into a pool of money to pay off secured creditors first, and then vendors, if there was any left over. Usually there is darn little left at that point.
I wonder if there might be exemptions for farmers who sold cattle.

Nancy Howell · Nov 9, 2010

Attorney time. No way would I send the money back until I had talked to an atty.

HuskerMedic · Nov 9, 2010

Isn't this about the same thing that went on with all the people who sold corn to Vera Sun (the big ethanol producer) who went bankrupt?

As was stated above, this is to avoid people getting preferential treatment by a company that is on the way out...something like hiring the son-in-law as a consultant for a huge fee right before the bankruptcy hits.

I think there is a way around it...have to prove the transaction was in the course of "normal business" or something to that effect.

With that much $$$ involved, I think talking to an attorney familiar with bankruptcy proceedings would definitely be worth the money.

bison · Nov 9, 2010

I would tell them,come and get it.They better be bullet proof.

petetx · Nov 10, 2010

if in my old age if i understand they got his cattle and the money to? not much different than rustling
lawyer time

Anonymous-0 · Nov 10, 2010

Just imagine how bad it'll be once the SPELLING POLICE get there.....

gene bender · Nov 10, 2010

You need ro listen to the Big Show on WMT and get the facts instead of someone said ect.

fixerupper · Nov 10, 2010

You will have to prove you didn't get preferential treatment. Preferential treatment in this case probably means they didn't have enough money to pay every bill so they picked and chose their favorites were and payed them only while the others sat high and dry.

I almost got caught up in that when the Verasun plant closed at Albert City. I would have had to pay back $51,000 but the grain I sold was brokered by the local elevator so they were stung instead of me. The local elevator brokered hundreds of thousands of bushels to them so they were in it big time. The Verasun payback has been dropped for the time being so maybe yours will too, I hope. Good luck. Jim

Dean · Nov 10, 2010

Your friend will need to contact an attorney specializing in bankruptcy law, not a general practicioner.

Note: In most (all?) states it is at least unethical for an attorney to represent multiple clients in a case such as this due to conflicts of interest.

Dean, who does not practice bankruptcy law.

RodinNS · Nov 10, 2010

Ofcourse he got preferential treatment. Anyone that's about to hit the skids generally makes a point of paying their daily suppliers and employees while monthly and longer term bills sit and wait... in this case if there was no cattle and no people, nothing would get paid.
As court orders go, this one is rather unreasonable. Hopefully he can fight it and win.

Rod

Leroy · Nov 10, 2010

Multiple clients would be a class action and allowable.

dhermesc · Nov 10, 2010

This is not a class action suit.

Jim in Ma. · Nov 10, 2010

Winn, lose or draw - I would get an attorney and go down fighting.

Dean · Nov 10, 2010

NO! NO! NO!

This is not a class action.

A class action must be certified by the court, and such will not happen in this case.

Dean

bc · Nov 10, 2010

There are a few due process steps in court before a Judge will issue a court order against a specific person with paperwork being filed and served and time to object and request a hearing. A blanket type cattle call letter from a trustee or a blanket order is just that. There are exceptions to every rule and come down to how the facts are construed. Sometimes it can be worked out informally with a trustee and sometimes the Judge has to decide. That's the legal process at work. There are time limits involved with everything so he should always act quickly.

By the way, in most places a lawyer can represent multiple clients but the process of getting informed consents and waivers from everyone is more trouble than its worth. Less of a problem in a bankruptcy case if everyone is part of the same class who usually have equal interests.

Like others have said, he will need an attorney if he doesn't already have one.

Mike (WA) · Nov 10, 2010

There is an exception to the preferential transfer rule for moneys paid in the ordinary course of business- and this should qualify.

I disagree with Dean to the extent that I think one lawyer can represent several parties with virtually identical interests- a vegetable packer here filed Ch. 11 (later converted to 7) and one firm represented many of the growers (who hadn't been paid). Cash sellers of cattle would have identical interests (no contracts involved, etc.- just deliver the cattle and get paid by the packer). So long as the lawyer represents everyone's interests without preferring one over another, and with the consent of the clients, I think it would be OK. And probably a good idea- you need somebody high-powered, and splitting the cost among many clients would make sense.

JOCCO · Nov 10, 2010

May be he needs to file Bankrubsy??

fixerupper · Nov 10, 2010

He needs a personal lawyer to prove he was not given preferential treatment by the packer. Each case needs to be and will be treated individually in this situation. Jim

tg in VA · Nov 10, 2010

Years ago, when Pilot Freight Carriers filed for bankruptcy, they owed my company several thousand dollars in negotiated loading allowances. They were one of our major carriers and we owed them more than the owed us.

I refused the loading allowance checks and did an offset against the money we owed them.

According to our corporate attorney, any monies received from Pilot in the 90 days before they filed would have had to be returned for dispersal by the bankruptcy judge. However, by taking the offset, we were free and clear in that we had merely paid them less than they had invoiced.

Your comments about the $60K are consistent with what happened to my comapny.

JDseller · Nov 10, 2010

If you can prove that the cattle sales where "normal" business practice then you DON"T have to return them. The court is looking for preferential treatment of creditors. You can"t pay off one and not another. We just went through this with Veri Sun ethanol bankruptcy.

I think that it is some "BIG" law office trying to get payment for some big creditor. They petition the court about getting the cattle sales checks back. Most of the time you are protected.

Bankrubsy court order to return payment for cattle.

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