Monday, September 19, 2022, 7:30 pm
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This afternoon, the acting US Bankruptcy Trustee David W. Asbach filed several objections to Express Grain's "Disclosure Statement," in which EG proposed to liquidate the company, while filing "claw-back" lawsuits against a potential host of farmers and vendors who did business with EG in the 90 days prior to its bankruptcy filing. Mr. Asbach is represented by Abigail Marbury.
To read our previous reporting on EG's liquidation plan, see here: Beware the claw backs: Express Grain threatens to sue its own creditors and other companies that did business with it
Craig Geno has applied to the court to allow EG to hire his law firm to prosecute the claw back lawsuits, and other matters, on a one-third contingency fee basis. To see Geno's motion, click here: Application to Employ Geno Law Firm as Special Counsel
The US Trustee objects to several articles in EG's Disclosure Statement:
In Article IV, EG proposes to pay off the Priority Claims over a 60 month period of time, because there is "probably not enough cash to pay" them all now, and additional priority claims are likely to be filed in the future. Priority Claims are paid AFTER Administrative Claims (which include legal fees to Craig Geno and management fees to CR3), but BEFORE Secured Claims, and long before unsecured claims (most of which will never be paid in this case).
But the Trustee objects:
Article IV of the Disclosure Statement sets out the treatment of priority claims. After discussion with counsel for the debtor, the UST objects to the priority claims being paid over a period of sixty months. The UST asserts that the known priority claims should be paid in full at confirmation.
In Article VI, EG proposes for the court to appoint CR3 employee Heather Williams to act as the liquidating trustee.
But the Bankruptcy Trustee objects:
While the Disclosure Statement names a proposed liquidating trustee, it does not provide any provision for replacing the liquidating trustee in the event that she changes employment, falls ill, or otherwise no longer wishes to or otherwise cannot serve as liquidating trustee. The UST objects to the Disclosure Statement to the extent that the Debtor's creditors have not been provided with a contingency plan in the event that the liquidating trustee must be changed.
The Bankruptcy Trustee also objects to certain duties that have been left out of EG's plan:
The UST objects to the Disclosure Statement to the extent that the liquidating trustee's specified duties and obligations do not include the obligation to file post-confirmation monthly operating reports and/or to oversee and ensure the timely payment of UST quarterly fees.
In fact, EG has not filed any Monthly Operating Reports since the March 2022 report which was filed on May 24, 2022.
The US Trustee also requests clarification regarding the proposed "discharge" of the officers, directors, and managers of the bankrupt company. The language used in EG's Disclosure Statement might be read to mean that those individuals will be absolved of any debt or other obligation that they owe EG. Thus:
The UST seeks clarification of Article VI, Section D, as to the "discharge" of Debtor's [Express Grain's] directors, officers, managers, or other members of any governing body of the Debtor. To the extent that the term "discharge" is construed to mean the canceling of any debts owed to the Debtor by its directors, officers, managers, or other members of any governing body of the Debtor, the UST objects to same.
The US Trustee is also concerned that portions of the Disclosure Statement are overbroad that would give the CR3 liquidating trustee immunity from liability for her work in liquidating EG:
The UST objects to the exculpation an[d] indemnification provisions of the Disclosure Statement asserting that they are overbroad, particularly as to the liquidating trustee who has not yet been approved.
Finally, the US Trustee concludes:
WHEREFORE, PREMISES CONSIDERED, the United States Trustee prays for an order denying the Debtor's Disclosure Statement.
To read the US Trustee's objection in full, see here: US Trustee Objection to Express Grain Disclosure Statement
The hearing on EG's Disclosure Statement is scheduled for October 6, 2022. Today is the last day for the filing of objections to the Statement.
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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