FARGO, N.D. - North Dakota farmers could see some $640,000 in credit sales from the Anderson Seed insolvency by mid-May after a Cass County District Court judge approved separate parts of a settlement negotiated by the North Dakota Public Service Commission.
Cass County District Court Judge Wickham Corwin on Feb. 25 ruled on three main parts of the deal: the credit sales distribution; the settlement with Legumex Walker, the Winnipeg-based company that has purchased much of Anderson Seed's assets; and the cash settlement of $965,000 to cover 43 percent of the $2.23 million in cash claims in the state.
PSC Attorney Illona Jeffcoat-Sacco says the cash settlement would be good for North Dakota’s claimants, as they would get only 13 percent without it.
Corwin’s action includes the following:
- Credit sale indemnity - North Dakota’s credit sales holders will receive 80 percent ($640,000) of valid claims totaling about $800,000 from a state indemnity fund. Credit sales contracts include price-later and delayed-price contracts in which farmers turn over title to the processor or elevator.
The PSC will issue a notice of the order as soon as possible. After a judgment is entered, and after a 60-day appeal period, if there are no appeals, the PSC will start making payments. No appeals are expected.
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- Legumex Walker settlement - Corwin approved the settlement deal announced last December between the PSC, Anderson Seed and Legumex Walker. In the approved deal, Legumex would pay $685,000 - including $485,000 that it owed Anderson Seed for sunflower seed, another owed $102,250, and more. The money will go toward the $965,000 cash settlement - put into a trust under control of the PSC and distributed to farmers based on determinations of who deserves what.
For the first time, Jeffcoat-Sacco announced in court that the PSC could account for only $970,000 of the $1.6 million sale from North Dakota elevators. Another $630,000 came from either South Dakota or Minnesota.
Jon Brakke, attorney for CHS, the major creditor formally opposing the deal, unsuccessfully argued that the PSC should have gone after Anderson Seed and Ron and Stephanie Anderson, principles in the company. The PSC had mulled going after Legumex Walker for the value of the seed on grounds that the $1.6 million sale of seed wasn’t in the “ordinary course of business” because Legumex Walker was buying all the assets of Anderson Seed. Jeffcoat-Sacco said the PSC weighed the costs and delay of doing that, and decided the payoff wasn’t worth it.
Legumex Walker had emphasized it didn’t purchase the company’s Redfield, N.D., processing plant, so was buying only some of Anderson Seed’s assets. It also bought St. Hilaire Grain, a dry edible bean company.
Michael Gust, a Fargo lawyer representing some of the farmers, said he agreed with Brakke’s contention that the sale of Anderson Seed sunflowers to Legumex Walker was not in the ordinary course of business, but his farmer-clients had not objected to the deal. He confirmed that they’re still weighing further legal action against the Andersons.
- Cash sales - While Corwin approved the $965,000 cash settlement, he delayed deciding on the distribution because of a disputed claim by CHS. Brakke, representing a CHS Inc. elevator in Pierre, S.D., successfully asked for an extra month to study records his company received in January. CHS had filed claim for $740,140.52, but the PSC only has approved $45,512 of it. Corwin allowed CHS another month to prove its claims, based on new data accumulated from Anderson Seed that it hasn’t yet gone through.
Jeffcoat-Sacco said the burden is on CHS to prove through scale tickets what claims it has, and that it is not up to the PSC to disprove a claim. Brakke explained to Agweek that CHS “didn’t handle all of the trucking, so we didn’t have all of the records.”
“We do think CHS should have its own scale tickets to turn in, as any farmer turns in as a claim,” Jeffcoat-Sacco said.
Corwin denied a claim by Glenn and Lisa Gerving of Glen Ullin, N.D., that they should be paid a full amount of their claim because they had received a money judgment of $109,003 against the company. Brakke and others had objected to this. Corwin said it was without merit.
In a separate but related matter, Brakke said the trial date for a $1.5 million case in Polk County Court in Crookston, Minn., by CHS against the Andersons has been delayed to January 2015. It had been scheduled to go to court in April 2014 in Crookston, but Brakke said he asked the court for more time to prepare the case.
