Monday, November 14, 2022, 6:00 pm News Flash Archive

In the ongoing saga of the bankruptcy of Express Grain Terminals and its companion companies, Express Processing and Express Biodiesel (together, "EG"), new details have emerged regarding the money that UMB Bank has lost in the whole debacle.

In recent court filings by UMB Bank in the companion cases, UMB has disclosed that the Express Grain bankruptcy estate still owes the bank $35.8 million dollars, most of it in unsecured debt.

This fact emerged after EG petitioned the court to dismiss the bankruptcy cases for Express Biodiesel and Express Processing. According to their attorney Craig Geno:

The Debtor is required to file its disclosure statement and plan of reorganization on or before August 8, 2022.

However, there are few, if any, assets to be distributed in this case that are not subject to an order or orders lifting the automatic stay.

In addition, further administration of this case would only result in additional administrative expenses that can't and/or won't be paid.

Accordingly, there is no need for this Debtor to remain in Chapter 11 and the dismissal of this case is in the best interest of all creditors, all parties-in-interest and the Debtor. The Court shall retain jurisdiction with respect to the filing of monthly operating reports through the date the case is dismissed and the payment of fees due and owing to the Office of the United States Trustee.

The Motion is in the best interests of all creditors, parties-in-interest and the Debtor moves the Court for an order granting the Motion and dismissing this case.

To view EG's motion, see here: Express Processing Motion to Dismiss Bankruptcy Case

That's when UMB Bank filed its objection:

UMB asserts a security interest in substantially all of the Debtors' personal property including, without limitation, inventory, accounts, and farm products. In light of the 557 grain settlement and sale of substantially all of the Debtors' assets, UMB filed amended proofs of claim in the amount of $35,802.824.72, which at this point is primarily unsecured.

UMB Bank believes that some of the residual assets of the two subsidiary companies "might be best resolved in the bankruptcy proceedings. Until additional information and analysis are performed, the status quo should be maintained and it may be premature to dismiss the Ancillary Debtors' cases."

To see UMB Bank's entire objection, click here: UMB Bank's Objection to Motion to Dismiss

EG filed for bankruptcy when UMB called all its loans, totaling $70.6 million in September 2021. UMB called the loans when it said it discovered that EG had filed false reports inflating its grain holdings, which UMB Bank was relying upon as collateral for the bank loans. See our previous reporting here: UMB Bank levels new fraud accusations against John Coleman and Express Grain

Later, EG had its state grain licenses revoked by the Mississippi Department of Agriculture and Commerce, after MDAC determined that EG had submitted falsified audit reports which concealed EG's desperate financial condition. See our previous reporting here: Mississippi Department of Agriculture VOIDS Express Grain warehouse licenses due to fraud

In all, $218 million in claims were filed against EG, which has now liquidated for somewhere around $85 million. In the process, farmers were left unpaid for $48 million in grain they delivered to EG. Less than $9 million was ultimately paid to a handful of the farmers in the 557 Grain Settlement Agreement. See our previous reporting here: Bankrupt Express Grain pays out $57.6 million to bank, finance companies, and a few farmers

UMB Bank's share of the 557 Grain Settlement Agreement was $10.4 million.

UMB Bank bid for and won almost all of the physical assets of EG at the bankruptcy auction for $25 million, $4.5 million more than the next highest bidders. In the end, Frank Brumfield and Delta Grain purchased the grain warehouses, while Thoroughbred purchased the Greenwood oil mill.

In all, UMB Bank has received around $35 million of the $70.6 million it is owed by EG. UMB Bank had believed that it held EG collateral sufficient to cover the entire $70.6 million, but it turned out that the physical assets were highly overvalued, while EG had sold most of the grain collateral to other companies without informing UMB Bank.

Meanwhile, all the parties are still awaiting a ruling by Federal District Court Judge Henry Wingate on UMB's motion to dismiss the farmers' lawsuit against the bank, filed by Lexington attorney Don Barrett. The farmers are accusing UMB Bank of being in cahoots with EG to keep the company afloat until the farmers delivered their grain, and then shanghaiing the grain to pay off UMB's loans to EG. UMB Bank denies these accusations, claiming it was cheated by EG along with the rest of the creditors. See our previous reporting on this case here: Farmers' Attorney Don Barrett continues to pursue UMB Bank in Express Grain debacle

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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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