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Express Grain projects $4.8 million less in sequestered cash than previously estimated

Saturday, March 19, 2022, 5:47 pm News Flash Archive

Express Grain has again asked the bankruptcy court to continue to permit it to use cash collateral to carry out its wind down process, in other words, to continue business on a very limited basis until all the EG business operations are completely shut down.

But in the new proposed budget, the amount of projected sequestered cash (to be used to pay the interests of the creditors in the pre-petition grain) has been reduced from $57.5 million to $52.7 million, a decrease of $4.8 million.

Meanwhile, the court-ordered mediation began two days ago, but as of Saturday evening, no official word has been provided as to its progress, if any.

Even though UMB Bank won the auction bid for essentially all of EG's assets on February 25, 2022, the court has yet to file a final order approving the sale. EG still has the keys and is working to finish selling all the inventory, collecting the remaining accounts receivable, and closing and securing the facilities.

EG's request to continue limited operations may be viewed here: Motion for Post Sale Use of Cash Collateral for Wind Up Purposes

Under the proposed order, EG will only be able to spend money authorized in the proposed court approved budget, which may be seen at the tail end of the above filing.

But through the passage of time, the projected numbers have changed somewhat from the previous court order. In our previous reporting, we explained in detail how the "use of cash collateral" works, who objected to it, how it preserves the interests of the creditors claiming interests in the pre-petition grain, and how money is sequestered in accounts and cannot be used except by order of the court. See our detailed reporting here: Express Grain claims it has $41.6 million in "segregated accounts" collected to help pay off its creditors

Several interesting items appear in the motion and in the proposed budget, which runs through April 29, 2022:

1. The final projected amount of money sequestered has dropped from $57.5 million to $52.7 million. This may be seen by comparing the final lines on the two budgets provided in the links above, the former submitted to the court on February 18, the latest on March 16.

2. EG informs the court that UMB has agreed to separately fund services and "transition costs" incurred as a result of the change of ownership of the assets.

3. No salary will be paid to John Coleman.

4. UMB Bank and other pre-petition creditors will be afforded the right to have representatives on premises to observe and inspect all ongoing business operations.

5. The proposed court order bars any further crushing or processing of pre-petition grain.

6. In the new proposed budget, EG projects that it will have sold all of its inventory by March 18.

7. EG projects it will have collected substantially all of its Accounts Receivable by April 1.

8. Projected payroll will drop to an average of $26,000 per week.

9. Projected electricity costs will average around $39,000 per week. There is no explanation why this figure is so high.

10. The second week of April, EG will owe the bankruptcy trustee another $250,000.

11. Professional fees related to the Chapter 11 bankruptcy case will grow another $360,000 in the upcoming four weeks.


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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