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Creditors still scrambling to grab what's left of bankrupt Express Grain's money

Friday, June 2, 2023, 6:12 pm News Flash Archive

Several creditors have filed administrative or priority claims against the bankrupt Express Grain estate, which as of the March 2023 monthly operating report only had $2,084,758 left in the bank to wind down business and pay remaining claims.

Some of the claims still pending include:

Maples Gas Company, $51,092.43 for diesel fuel

Gresham Petroleum Company, $83,262.95 for diesel fuel and LP Propane

Louis Dreyfus Company Claypool Holdings, $395,051.98 for soybean meal

The largest such claim pending is that of Dr. Michael Coleman, who owned close to 99% of the Express Grain enterprise. He recently filed an administrative expense claim against the bankrupt company for $2,779,869, asserting that he loaned the bankrupt company that amount in order to make payroll after it filed for bankruptcy protection. EG is opposing Dr. Coleman's claim. See our original reporting here: Dr. Michael Coleman files $2.8 million expense claim against bankrupt Express Grain

EG is urging the court to reject some of the claims, and extend deadlines and put off the adjudication of the remaining claims until after the Express Grain Liquidating Trustee takes over on June 7, 2023.

The Maples claim for $51,092.43 involves diesel fuel delivered to EG within 20 days prior to the bankruptcy petition being filed. Maples filed its administrative expense claim in March 2022, and EG and Maples eventually settled the claim pending court approval. See the claim here: Maples Gas Company Claim

But after a whole year, Maples has still not been paid, even though the Plan of Liquidation has been confirmed by court order, so a Motion for Immediate Payment of Administrative Expense Claim was filed: Maples Motion to Pay Administrative Claim

EG's reply asked the court to defer the matter until after the new Liquidating Trustee takes over. But reading between the lines, it appears that there will not be enough money left to pay all the administrative claims, and there may be a need to pay them at a pro-rata share of the money that is left:

The Debtor [EG] has a number of administrative expense claims that were not anticipated that are "lining up," in light of the late-April deadline for filing administrative expense claims.

To see EG's full response to the Maples motion for immediate payment, view here: Express Grain Reply to Maples Motion for Payment

The Gresham Petroleum Company's claim is a pity, since it is a local company that was badly cheated in the Express Grain collapse. In all, Gresham delivered diesel and propane to EG and was never paid $245,907.38. Of that, fuel in the amount of $83,262.95 was delivered 20 days or less before EG filed for bankruptcy:

Gresham and the Debtor [EG] operated on a purchase order system whereby Fuel was purchased and payment was due on the 25th day of the month following thirty days from the date of the delivery. The Debtor owes Gresham $245,907.38 for Fuel delivered to the Debtor by Gresham before the Petition Date for which payment has not been made (the "Prepetition Claim"). Of this amount, $83,262.95 is for Fuel delivered within the 20 days before the Petition Date. . . . Both through its Proof of Claim and now through this Motion, Gresham asks the Court to grant it an administrative expense claim for the $83,262.95 and order the claim to be immediately paid.

. . . Section 503(b)(9) of the Bankruptcy Code allows an administrative expense for "the value of any goods received by the debtor within 20 days before the commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor's business." 11 U.S.C. Section 503(b)(9).

Gresham sold the Fuel to the Debtor during the ordinary course of the Debtor's business and the Debtor received the Fuel within twenty (20) days of the Petition Date. This Fuel allowed the Debtor to continue to operate its business resulting in Gresham providing a benefit to the Debtor's bankruptcy estate.

The rest of Gresham's claim for $162,644.43 will be treated as an unsecured debt, and no doubt will never be paid.

To see Gresham's motion, view here: Gresham Petroleum Company Motion to Approve Administrative Expense Claim

For reasons that are unclear, EG has objected to Gresham's administrative expense claim and asked the court to deny Gresham's request for relief. To view EG's opposition reply, see here: Express Grain Opposition to Gresham's Administrative Expense Claim

The rather larger administrative expense claim by Louis Dreyfus Company [LDC] for $395,051.98 for soybean meal, is part of a larger claim the company filed against EG for a total of $911,604.58. According to LDC, it:

. . . delivered 20 rail cars [of soybean meal] under that forward contract prior to the Petition Date that the Debtor has not paid for. Of the 20 rail car loads that were delivered, 9 cars were sold and delivered within 20 days prior of the Petition Date at a price of $395,051.98, which has not been paid to date.

LDC asserts it is entitled to an administrative priority claim under 11 U.S.C. Section 503(b)(9) for these 20-day shipments. The documents which support this claim are attached hereto and incorporated herein by this reference.

LDC asserts a total claim of $911,604.58 of which $395,051.98 is asserted to have an administrative priority . . . with the remainder of the claim in the amount of $516,552.60 asserted as an unsecured claim herein.

To view LDC's claim and documentation, see here:

Louis Dreyfus Invoices and Explanation of Claim

Louis Dreyfus Claims Register Filing

LDC has not yet filed a Motion to Approve its claim with the court, but LDC and EG have been negotiating behind the scenes. They jointly filed a motion to extend the deadline for LDC to file its motion for the court to approve its claim:

Louis Dreyfus [LDC] and the Debtor [EG] have exchanged information and had discussions regarding Louis Dreyfus's claim. However, in light of the fact that the Confirmation Order has been entered but the Plan is not yet effective, there is currently no one authorized to settle such claims.

Accordingly, the Debtor and Louis Dreyfus believe it would be in all parties' interest and could lead to conservation of judicial resources to extend the deadline for Louis Dreyfus to file its application for an administrative-expense claim by sixty days to and including June 27, 2023. This would allow time for the Liquidating Trustee to be appointed and the parties to attempt to settle this claim without the need for a formal application.

The Liquidating Trustee will take over all the remaining EG assets and assume responsibility to settle or litigate claims on June 7, 2023.

To read the joint motion requesting an extension of time in which to file LDC's Motion to Approve Administrative Expense Claim, see here: Joint Motion for Extension of Deadline

In addition to these administrative claims, United Rentals from Charlotte, NC filed a claim in early May 2023 for $64,952.94 for unpaid rental costs incurred during the months of August and September 2021, just before the bankruptcy, when EG rented several pieces of heavy construction equipment, and never paid for it.

This claim by United Rentals is unsecured, and no priority or administrative expense is claimed. It will probably never be paid, since it appears to have been filed too late. To see United Rentals' claim, view here: United Rentals Claim against Express Grain

EG, for its part, is still trying to recoup its Employee Retention Tax Credit of around $2,187,817.96, as first reported by the Greenwood Commonwealth. EG refiled its Objection and Counterclaim on May 30, 2023, apparently in part to cure a defective Notice of Deadline that needed to be included. EG is complaining that the IRS has been dragging its feet in paying out the tax credit, while EG has filed all its tax returns and owes no taxes at all. To view the new EG filing against the IRS, see here: Express Grain Objection and Counterclaim against the IRS

If EG is successful in receiving its ERTC money from the IRS, presumably it will be able to pay more of the administrative expense claims that have been filed.

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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