Wednesday, February 2, 2022, 7:41 pm
News Flash Archive
A large group of farmers who delivered grain to the now bankrupt Express Grain and were never paid, are preparing to question UMB Bank, StoneX, and Macquarie, three financing creditors who claim that they own over 4 million bushels of grain and are seeking priority status in payment by EG's bankruptcy estate.
EG still owes the farmers over $40 million for the grain they delivered to EG. All together, EG owes around $165 million to the farmers, UMB Bank, StoneX, Macquarie, and a host of other smaller creditors.
The farmers and the three financing creditors are at daggers drawn against each other in the proceedings, as there does not appear to be enough money to pay both the financing creditors and the farmers at the same time.
Some of the farmers have already accused UMB Bank of fraud, claiming UMB knew but hid the facts about EG's precarious financial status, and plotted to foreclose on EG at just the right moment to capture the value of their grain deposits. See our reporting here on the farmers' suit against UMB: Farmers double down in class action suit against UMB Bank in Express Grain failure
Just a few days ago, the large group of farmers had asked the court to strip UMB Bank, StoneX, and Macquarie of their "warehouse receipts" and not allow them to be used to prove ownership of over 4 million bushels of grain. See our reporting here: Farmers ask Court to throw out "illegal" warehouse receipts in Express Grain bankruptcy
But today, the large group of farmers filed its Notices of Deposition against the three financing creditors. This means that attorneys representing the farmers will be permitted to question the corporate representatives under oath to discover the facts necessary to move forward in the bankruptcy case.
The Notice of Deposition for UMB Bank may be seen here: Notice of Deposition of UMB Bank
The deposition of UMB Bank is set for February 23, 2022. The other two firms will be deposed in the days adjacent to that.
Some of the matters that UMB Bank will be questioned concerning are:
1. UMB's knowledge of the Business Debtors' [Express Grain and related companies] financial condition in 2017, 2018, 2019, 2020, and 2021.
2. All applications and documents and other information used by you to assess the creditworthiness of the Business Debtors.
3. All documents and other information upon which you have relied in agreeing to any extensions or renewals of any loans to the Business Debtors or any other transactions with the Business Debtors from 2018-2021.
4. Any internal audits of the relationship with the Business Debtors from 2018-2021, including any assessments of the loans or any other transactions by your credit department.
5. Any and all financial audits or financial assessments conducted by you or on your behalf related to the Business Debtors.
6. All financial audits of the Business Debtors submitted to you since 2016 by any entity or person related to or concerning the Business Debtors.
7. All internal procedures you used to ensure the Business Debtors had adequate income to meet their payments and obligations with respect to any loan or other transaction.
8. All communications between you, StoneX Commodity Solutions LLC ("StoneX")
and/or Macquarie Commodities (USA) Inc. ("Macquarie"), including any of their
employees or agents, regarding the Business Debtors.
9. All communications between you and CR3 regarding the Business Debtors and/or this bankruptcy case.
10. Your knowledge that the Business Debtors were not in compliance with your
requirements with regard to loans or other transactions, including but not limited to, when you first acquired that knowledge and how you acquired that knowledge.
11. Your creditworthiness standards for line of credit and long-term debt borrowers, or other type of transactional participants, in effect in 2018-2021.
12. Your policies and procedures in effect in 2018-2021 related to line of credit and longterm debt, or other type of transactional debt, when a borrower or transactional participant is not in compliance with your requirements.
13. Any investigation and/or monitoring of the Business Debtors, including but not limited to monitoring of inventory, by you or any other entity or person in 2020 or 2021.
14. All in-person inspections of the Business Debtors in 2020 and 2021.
15. Your knowledge of the Business Debtors' operations, including the crushing operations.
16. Any delivery of soybeans by UMB to the Business Debtors and by the Business Debtors to UMB.
17. Any investigation of Mississippi law on the issuance of warehouse receipts for purchased grain, including any discussions with any representatives of the Mississippi Department of Agriculture and Commerce with respect to this issue.
18. The documents produced pursuant to the request for production of documents served on you by All Farm Groups.
19. The ordinary course of business between the Business Debtors and the farmers with unpriced basis contracts.
20. Any efforts to demand segregation of grain by one or more of the Business Debtors.
21. Any determination made to permit or prohibit one or more of the Business Debtors as "sellers" of grain to maintain possession of grain and to continue crushing the grain that may have been held by one or more of the Business Debtors at the time the warehouse receipts were issued.
22. The decision to renew and/or enter into new contracts with one or more of the Business Debtors.
23. Any efforts to investigate title to grain "purchased" from one or more of the Business Debtors and to ascertain whether such grain was subject to other liens/interests.
24. Efforts made to confirm the accuracy of the Borrowing Base Certificates.
No doubt the three firms being questioned will object to some questions in these areas as unjustified fishing expeditions, and answers may not be forthcoming. That is typical of depositions, and of course, these firms and other parties will be entitled to depose the farmers in turn.
In other developments, today the bankruptcy judge authorized EG to sell the 15 golf carts and electric truck as EG had requested. See our previous reporting on this matter here: Who paid for Express Grain's 15 new golf carts?
John Pittman Hey
The Taxpayers Channel
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