Friday, May 12, 2023, 3:57 pm
News Flash Archive
The new Chapter 7 Bankruptcy trustee, Mr. William Fava, is asking more questions about several bank accounts and an Ameritrade stock trading account that are or were at one time owned or controlled by John Coleman, president of the bankrupt Express Grain operation.
The Taxpayers Channel had previously reported that in John Coleman's personal bankruptcy case, Mr. Fava had asked that the creditors be given notice to provide proof of their claims, and that the case be kept open, because he has "discovered assets" which could be distributed to the creditors. In addition, a creditors meeting was scheduled.
To see the trustee's request, click here: Trustee's Notice of Discovery of Assets
At first, the assumption was that those assets were already known, and were the liquidated value of various real properties that Mr. Coleman's previous Chapter 11 bankruptcy estate had sold with court approval.
But on April 28, 2023, at the creditors meeting, further details about the trustee's search for assets were disclosed.
It appears that Mr. Coleman himself attended the creditors meeting, along with his principle bankruptcy attorney Craig Geno. An attorney representing UMB Bank, by far the largest creditor, also attended.
The trustee is requiring various documents and information to be provided to him:
* Coleman's 2022 tax returns
* information from attorney Charlie Swayze regarding a $25,000 check
* bank statements for 4 of Coleman's accounts going back to September 29, 2019
* RJ O'brien and Associates statements going back to September 29, 2019
* TD Ameritrade statements going back to September 29, 2019
* approximately $260,000 that was in an account on date of filing
The $25,000 check appears to refer to a payment that Coleman gave the law firm of Whittington, Brock and Swayze sometime before or after he filed for bankruptcy on September 29, 2021. As required, Mr. Swayze disclosed the payment to the bankruptcy court in mid January 2022. Just why the bankruptcy trustee wants information regarding this check is unknown.
But recently, Swayze's law firm filed its first request for compensation in the amount of $14,881.48, for services rendered from September 27, 2021 through May 1, 2023 in the bankruptcy case. It is not clear whether this would come out of the $25,000 already paid by Coleman to the firm, or whether this is in addition to that payment.
To see the application for compensation and the itemized invoice, click here:
Swayze law firm application for compensation
Swayze itemized invoice
The request for statements from RJ O'brien and Associates refers to a trading account that Coleman had with R. J. O'brien, a futures brokerage firm. In several places in the court appointed Examiner's report, questions were raised about Coleman's dealings with R. J. O'brien:
There were several transfers to and from a commodity trading account with R.J. O'Brien with a net amount of $379,247.
The individual "trading" account with R.J. O'Brien noted based upon analysis of the 2018 tax return appears to present a potential conflict of interest for R.J. O'Brien and Mr. Coleman as R.J. O'Brien appears to have been also providing services to and for the benefit of EGT [Express Grain Terminals]. An operating account held by Mr. Coleman with a creditor of EGT presents conditions ripe for potential fraudulent and/or otherwise potentially avoidable transfers. Further analysis and/or investigation is recommended.
As a result of the analysis by the Examiner and his team of tax returns and associated documents for tax years 2018 and 2019, the Examiner requested additional statements for the R.J. O'Brien account. Mr. Coleman did not provide the requested statements to the Examiner.
The Examiner believes that further investigation of the relationship between R.J. O'Brien, Mr. Coleman, and EGT is prudent. Further investigation of the assets held by R.J. O'Brien on behalf of Mr. Coleman and Mr. Coleman's immediate family members would also be prudent.
Our reporting on the Examiner's findings, as well as the complete report itself, may be seen here: Court appointed Examiner and Lawyers run up a $120,000 bill in John Coleman's personal bankruptcy case
Even though the Examiner did not inquire regarding Mr. Coleman's stock trading account with TD Ameritrade, the new Chapter 7 Trustee is asking questions.
Initially, Coleman did not disclose the Ameritrade account in his original bankruptcy filings, but in May 2022, after discussions with the United States Trustee and some of the creditors, Coleman filed amended statements, which included the Ameritrade account.
According to the amended filing, the TD Ameritrade account was "closed, sold, moved, or transferred" on September 23, 2021, just days before Coleman filed for bankruptcy protection. As of that date, the account had a balance of $7,904.84. The amended statement may be seen here: Amended Bankruptcy Statement of Financial Affairs of John Coleman
As for the Trustee's query regarding the $260,000 that was in an account on the date of filing, it is unclear what account is being referenced, or what the "date of filing" means.
It may refer to the date when the case was converted from Chapter 11 to Chapter 7, which occurred on March 2, 2023. In the last Monthly Operating Report filed in the case, for the month ending January 31, 2023, the "cash balance at the end of the month" was reported to be $263,135. This was the amount of money left after all the real estate, including two homes, and three house lots in Carroll County, had been liquidated with court approval.
The last monthly operating report filed in the bankruptcy case may be seen here: January 2023 Operating Report
Alternatively, the trustee could be referring to some other account having a $260,000 balance at the time the bankruptcy case was filed on September 29, 2021.
Whatever assets the trustee finds to pay off creditors, they will be but a drop in the bucket compared with the $90+ million in claims originally filed by Coleman's creditors.
The largest creditor, UMB Bank, originally filed a $70+ million claim, because Coleman was personally liable if his company, Express Grain, defaulted on the bank loans, which it did.
But the UMB Bank claim has been whittled down now to just $35,802,824.72, due to partial payment on, and offsets against, the original indebtedness.
According to the filings, UMB Bank received $10,402,816.40 from the 557 Grain Settlement. Somewhere around $9 million of the grain settlement was paid to farmers, who were cheated out of around $48 million dollars in unpaid grain deliveries. The largest part of the grain settlement went to StoneX and Macquarrie, two financing companies which had bought almost all of the grain inventory, but never taken delivery.
UMB Bank also deducted $24,418,641.36 from what Coleman owes for the "credit bid" it made, when it obtained ownership of Express Grain's facilities, equipment, and real estate at the bankruptcy auction held on February 25, 2022. It has since sold all those assets to Delta Grain Company and Oxbow Crush.
To read the amended claim, and detailed explanation of why it has been decreased, see here:
UMB Bank Amended Proof of Claim re: John Coleman
UMB Bank Claim itemization, payments, and set-offs
It might be expected that John Coleman's debt to UMB Bank would be further reduced depending upon the settlement that UMB Bank recently reached with his father, Dr. Michael Coleman, who UMB Bank sued to recover the defaulted loans made to his company. If Dr. Coleman pays off some of the money owed to UMB Bank, John Coleman's liability should be decreased further. See our previous reporting here: UMB Bank, Dr. Michael Coleman abruptly settle their $39 million lawsuit in the Express Grain collapse
However, a possible snag has occurred in Dr. Coleman's settlement with UMB Bank. Though the court closed the case, it can still be reopened if the settlement is not agreed upon and finalized.
And so far, Dr. Coleman and UMB Bank have not been able to agree on the actual terms of the settlement. UMB Bank informed the court:
. . . the Parties came to an agreement in principle to resolve this case.
On March 20, 2023, the Court entered an order that this case is dismissed without prejudice, but either party may move to reopen the case if settlement is not perfected. The deadline to seek to reopen the case is forty-five days after the entry of the order, which is May 4, 2023 (the "Deadline").
Since that time, two of the attorneys for Coleman have sought to withdraw as attorneys for the case, and the third attorney for Coleman has moved to a different law firm.
Negotiations regarding the proposed settlement agreement have proven difficult, as the parties have thus far been unable to agree on the language of a settlement agreement. As a result, the Parties need additional time to document the settlement agreement.
Accordingly, UMB requests the Court extend the Deadline to May 31, 2023.
Counsel for Coleman consents to this request.
The request for a time extension may be seen here: UMB Bank Motion for Time Extension to Finalize Settlement with Dr. Michael Coleman
To see our previous reporting on why Mr. John Coleman's bankruptcy was converted to Chapter 7, click here: Court orders Express Grain president John Coleman's personal bankruptcy into Chapter 7
The creditors meeting has been continued to May 28. Perhaps additional clarification will then be filed in the court docket as to the nature of the "discovered assets" that the trustee has described.
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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