You may have heard rumors about Express Grain’s bankruptcy filing if you live in Greenwood, MS, or the surrounding communities. And if you haven’t, there’s no time like the present to learn.
Ever since this family-owned agricultural processing business went under, farmers in the Delta have faced one payday delay after another. Unfortunately, this begs the question: does Express Grain’s bankruptcy mean you have to file for Chapter 12, too?
Wait, What Happened with Express Grain?
Express Grain Terminals, LLC is a family-owned agricultural business that operates in the Mississippi Delta region. The grain handling and processing company buy grains like soybean, corn, and wheat to process into food and fuel products.
Unfortunately, in September 2021, Express Grain filed for Chapter 11 bankruptcy. The company’s filing allowed it to continue operations while restructuring its business and finances.
Express Grain’s Debt Load
Express Grain owed over $156 million in various debts at the time of filing. Between $44 and $46 million is estimated to belong to over 200 farmers who had delivered grain to be processed into other products. These farmers have yet to be paid for their crops seven months later. The bulk of those has filed demands to recover their crops stored in Express Grain’s facilities.
UMB Bank’s Class-Action Lawsuit
Unfortunately, the story isn’t as simple as a bankruptcy filing and 200 unpaid farmers. Since the bankruptcy filing, several plaintiffs – including a few stiffed farmers – have joined a class-action lawsuit against UMB Bank in Kansas City, Missouri.
But why?
The lawsuit alleges that UMB Bank was aware of Express Grain’s financial troubles last spring. However, the plaintiffs claim, the bank waited to collect on Express Grain’s debts until the harvest season, when the company’s facilities would house the most crops.
If true, the bank’s actions ensured that it would see fewer losses when it seized Express Grain’s properties as collateral – while at the same time stiffing farmers on their payday.
Express Grain’s Warehouse License Woes
As of February 2022, the Mississippi Department of Agriculture revoked Express Grain’s warehouse license. Essentially, the Agriculture Commissioner alleges Express Grain falsified financial information in its warehouse license applications. The company is accused of misrepresenting an operating loss of $20 million as a profit of $162,000 for the filing year.
Under current Mississippi law, companies with their warehouse licenses revoked must advertise the fact so that the grain owners can reclaim their property. However, thanks to the actions of UMB Bank, who can claim ownership of the grain (the company’s lenders or its 200 unpaid farmers) remains in contention.
UMB Bank Snaps Up Express Grain’s Assets at Auction
But again, the story doesn’t stop there.
On March 5, 2022, Express Grain sold its primary assets (three storage warehouses and a soybean processing plant) at auction to cover some of its debts. The winning bidder? UMB Bank snatched up the company’s property for $25 million.
But because Express Grain was already “in the red” with the bank, the company won’t receive cash for its property. Instead, the $25 million bid will reduce the amount of debt Express Grain owes to UMB.
As a result, the company has no liquid cash to pay the farmers it still owes for the grain crops in its warehouses. A hearing to determine ownership of the grain began on March 31. At this time, the court has yet to reach a conclusion.
What Does All This Mean for Farmers?
Sadly, for Greenwood, MS farmers, it doesn’t look like this saga will end quickly – or in their favor.
Because Express Grain filed for bankruptcy due to its debts, deciding who gets to claim the delivered but unpaid-for grain was already tricky. But since the company auctioned off its warehouses (and the grain inside) to one of its creditors, it is more complicated than ever.
While Express Grain’s bankruptcy attorney has said, he expects some farmers to appeal the sale of its warehouses, unraveling that ball of yarn could take some time. (And may still result in an unfavorable outcome for Mississippi farmers.)
Unfortunately, farmers who delivered crops to Express Grain may never be paid for their products. And if that’s the case, it’s also possible that the company’s actions will directly contribute to a spike in Chapter 12 bankruptcy cases in the Delta area.
Navigate the Express Grain Disaster with Legal Help
Going through bankruptcy can be a scary, emotional time, especially if the reason for your bankruptcy isn’t your fault. But if you’re one of the hundreds of farmers in the Greenwood, MS area impacted by Express Grain’s bankruptcy, you don’t have to go it alone.
Our legal team is prepared to handle your Chapter 12 bankruptcy case from start to finish here at Rollins. Our experienced bankruptcy attorneys in Mississippi can help you get back on track – and back to business – as quickly as possible with our expert guidance.
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