The trustee in the ongoing Turner Grain bankruptcy case
filed multiple suits in federal court on Thursday in an attempt to recover potentially tens of millions of dollars from several business entities in Arkansas that received payments from the defunct company before it filed for bankruptcy almost two years ago.
The complaints names as defendants several other entities associated with Turner Grain: Ivory Rice LLC, Agribusiness Properties LLC
and Turner Commodities, Inc
. The filings say those companies were operated out of the same office as Turner Grain by its owners, Jason Coleman
and Dale Bartlett
. The trustee now handling the case, Randy Rice, also seeks smaller payments from two businesses not clearly associated with Coleman or Bartlett, Minturn Grain of Hoxie and Southern Rice & Cotton of Harrisburg. Another complaint names AgHeritage Farm Credit Services,
a major rural lender in Arkansas.
Turner Grain Merchandising was a major dealer in the east Arkansas commodity business before it failed in 2014
, leaving famers throughout the region unpaid. This summer, however, some farmers began receiving letters
from the bankruptcy trustee, saying they'd have to pay back
money that they received from Turner Grain shortly before its collapse.
That's because of a clawback provision in federal bankruptcy law that considers payments made to creditors within a 90-day window before the bankruptcy filing to be "preferential." The reasoning is that a business on the verge of insolvency will often make strategic decisions about which debts it pays off, thus leaving other creditors in the lurch when the ship finally goes down. For payments made to "insiders" — such as, say, other business entities associated with the owner of the company that's about to go bankrupt — the window is one year. Transfers of this kind can be considered fraudulent, since they may be an attempt to preserve assets from bankruptcy.
Since Turner Grain may well have made other preferential payments before it went belly up, more complaints — or "adversarial proceedings" in the language of bankruptcy litigation — may be yet to come.
During the year preceding Turner Grain's October 23, 2014 bankruptcy petition, the business transferred around $59.6 million to Ivory Rice and Agribusiness Properties, one filing states. During that same year, Turner Grain paid Turner Commodities about $29.7 million. (Whether those entities still hold any of those assets remains to be seen.)
Then there are some $5.8 million in payments made by Turner Grain to AgHeritage, the rural lender, in the year before the bankruptcy occurred. The problem is that those transfers were payments made on a line of credit held not by Turner Grain but by Agribusiness Properties. That is, as Turner Grain approached the financial brink in 2014, the company made millions of dollars of payments on a debt it didn't owe — but that a separate company associated with its owners did. The purpose, the complaint alleges, was to "hinder, delay or defraud creditors of Turner Grain."
The payments to Southern Rice & Cotton and Minturn Grain which the trustee seeks to recover were $1 million and $950,000, respectively.
Here are the filings: