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Express Grain requests to auction all its assets on February 25

Friday, February 11, 2022, 4:25 pm News Flash Archive

The transcript of the Mississippi Department of Agriculture and Commerce hearing on Express Grain's licenses, which was held on February 3, 2022, offers several interesting facts about the ongoing saga of EG's bankruptcy case.

The hearing resulted in MDAC Commissioner Andy Gipson revoking EG's warehouse licenses yesterday. See our reporting here: Mississippi Department of Agriculture VOIDS Express Grain warehouse licenses due to fraud

But at the hearing, EG's bankruptcy attorney Craig Geno made some interesting statements:

1. EG has petitioned the bankruptcy court to allow EG to auction all its assets on February 25, 2022.

2. EG has asked the court to hold a hearing that same afternoon to confirm and approve the best bid and allow the sale of the assets to be completed.

3. The bankruptcy court has not yet issued orders for the bidding and auction to take place.

4. The bankruptcy judge has permitted EG to continue to operate using cash collateral and grain inventory through February 25, 2022.

5. There are some environmental issues that must be addressed during the shut-down of the Greenwood oil mill facility, and EG has been meeting with MDEQ to make sure it is in compliance.

6. The supply of beans to crush into meal and extract oil from will run out somewhere between February 18 and February 25.

Dennis Gerrard, appointed by the bankruptcy court as CRO in charge of managing EG, also testified at the hearing.

According to Gerrard, he found the EG workforce to be very disillusioned. They and the community at large had been told that EG was on a "solid footing and moving forward," and so the bankruptcy came as a shock to everyone.

Gerrard said that EG was "not the most stable operation that we've run across." Production was "erratic" and the financial books "scattered" and "a little tough to work through." EG only had a part time chief financial officer.

According to Gerrard, EG has "no plans" to continue manufacturing soybean products after February 25.

Gerrard described interest in the grain warehouses as including around 15 possible buyers still checking things out. However, there is less interest in purchasing the oil mill operation, where the beans are crushed into meal and the oil is extracted.

Gerrard confirmed that the bio-diesel plant has been shut down since summer of 2021.

Gerrard testified that nobody in his restructuring organization was aware of the fraudulent and forged audit reports that had been submitted to MDAC until MDAC disclosed it to the bankruptcy court on December 20, 2021.

Other facts that emerged from the hearing:

All parties stipulated that John Coleman did sign the warehouse license applications, including swearing that the audits were true and correct. The notary who witnessed his signature provided a statement that Mr. Coleman did indeed sign the applications.

Neither John Coleman nor Dr. Michael Coleman attended the hearing. Commissioner Andy Gipson called each of them three times without any response received.

Joseph Earl Green, a partner of Horne LLP, testified that the audits submitted by John Coleman had been substantially altered from those provided by Horne LLP to EG. Green knew that the audits would be provided to EG's bank, UMB Bank, but did not know that they were also provided to MDAC as part of the licensing application.

Gene Robertson, the person at MDAC responsible for overseeing the renewal of grain warehouse licenses, testified that only one farmer, back in late 2020, had ever contacted the department about concerns that his payment from EG was late. Mr. Robertson spoke with John Coleman and UMB Bank about the matter, and they both assured him that the payment would be made in two or three weeks. The farmer was informed of this, and was apparently satisfied.

Copies of the true Horne LLP audits for 2018 and 2019 were also entered as exhibits at the hearing. The copies submitted by EG had all been altered and forged.

EG's actual profits/losses for the four years, as shown in the official Horne LLP audits, were as follows:

June 30, 2017: $2,400,028 loss
June 20, 2018: $9,333,150 loss
June 30, 2019: $6,311,034 profit
June 30, 2020: $21,226,386 loss

The transcript of the February 3rd hearing may be seen here: MDAC February 3, 2022 hearing transcript

The transcript exhibits may be seen here: MDAC February 3, 2022 hearing exhibits

John Pittman Hey
The Taxpayers Channel

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