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Express Grain settlement terms finally disclosed: farmers would receive only $9.25 million

Wednesday, April 13, 2022, 1:29 pm News Flash Archive

Late last evening, attorneys representing various creditors in the Express Grain bankruptcy case finally filed their Motion to Approve Settlement Agreement with the bankruptcy court.

Now, for the first time, the actual terms of the settlement have been disclosed to the public. The settlement agreement is quite complex, but here are some of the most interesting items:

As of April 1, the total money in the pool for payment of grain claims is $57,817,674.30

The share the settling farmers will receive is approximately $9.25 million.

The share that the warehouse receipt holders (UMB Bank, StoneX, and Macquarie) will receive is approximately $48.6 million.

The warehouse receipt holders and all the production lenders have signed onto the agreement. The farmers are choosing whether to agree or not by submission of a special "election form."

Once the farmers agree to the settlement, they may not withdraw their agreement.

Farmers who join the settlement must drop their claims against all the other parties to the settlement. This would include dropping their claims against UMB Bank in the lawsuit filed by Don Barrett.

Some farmers (referred to as "disclaiming") will agree to drop their claims to the grain money entirely, and seek to pursue other legal remedies, including Mr. Barrett's lawsuit against the bank. These farmers will receive compensation for their previous legal costs out of the $9.25 million allocated to the farmers.

Other farmers (referred to as "non-consenting") will refuse the settlement completely and demand their day in court in the 557 trial which has been put off until at least June. A small portion of the $58 million pool (up to $5 million) will be reserved for the payment of possible claims won at the 557 trial. At that trial, non-consenting farmers' claims of Reclamation or Constructive Trust are the only claims that may be presented.

The bankruptcy court must approve the settlement agreement before it can take effect. A hearing is set for April 25 for approval of the settlement agreement.

The settlement agreement will collapse if too few farmers agree to its terms within 10 days after the court approves the agreement.

The settlement agreement will collapse if any production lender withdraws its consent.

The farmers will still be liable to repay their production lenders for the loans they received. When the settlement proceeds are distributed, checks will be made out jointly to the farmers and their production lenders, if any.

Neither John Coleman nor Dr. Michael Coleman are parties to this agreement.

The settlement agreement and motion to approve it may be seen here:

Motion to approve settlement agreement

Text of settlement agreement

To read our previous coverage of this proposed settlement, see here: Express Grain settlement hits snag

To review, the warehouse receipt holders (UMB Bank, Macquarie, and StoneX), the farmers who were never paid for their grain deliveries to EG, and the production lenders who hold liens on the crops for the money they lent the farmers, all have claims to the grain inventory left when EG declared bankruptcy. There are almost twice as many claims to ownership or interest in the grain, as there was actual grain in the warehouses.

Now, almost all the grain has been liquidated into money, and the question of who the money goes to is in hot dispute. The dispute was to be settled at a monstrous 557 Hearing which was slated to go on for several weeks.

The settlement agreement seeks to compromise and agree how to divide up the liquidated grain assets among the contending parties.

But some farmers are opting out of the settlement, and some intend to pursue a lawsuit filed by Don Barrett against UMB Bank, claiming that the bank conspired to "seize" the farmers' grain to pay off the $71 million that EG owes the bank.

For those farmers who have not filed an election form at all, there will be a hearing sometime in May where they will be given their last chance to appear and assert their claims, which will then be taken up at the 557 trial sometime in June.

The following production lenders have signed the settlement agreement: Agrifund, LLC; Ag Resource Holdings, LLC; Ag Resource Management; Bankplus; Bank Of Commerce; First South Farm Credit, ACA; Guaranty Bank & Trust Company; Planters Bank & Trust Company; Staple Cotton Discount Corporation; Southern Agcredit, ACA.

Additionally, UMB Bank, StoneX, Macquarie, and EG have also signed the agreement.

 


To read all our coverage of the Express Grain bankruptcy case, see here: Index of Express Grain articles

 

John Pittman Hey
The Taxpayers Channel

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