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| Via DTN
"VeraSun Creditors Go After Farmers
By Chris Clayton
8/31/10 1:49 PM
OMAHA (DTN) -- Creditors from the VeraSun Energy Corp. bankruptcy case are sending letters demanding that farmers pay back money paid to them by VeraSun or risk being sued.
Rick Tolman, chief executive officer for the National Corn Growers Association, said the NCGA office started getting calls on Friday from producers who had received the letter. Tolman said a lot of unhappy farmers have called the office since then.
"Apparently, creditors who have reorganized themselves have come back with a series of claims against farmers who delivered corn and were paid just before the bankruptcy and just after," Tolman said. "A pretty threatening group of letters have gone out to farmers saying 'You better pay the money back or we're going to come after you.'"
Iowa Secretary of Agriculture Bill Northey issued a statement Monday advising farmers who received one of the letters not to sign anything and contact an attorney, but do not ignore it. Iowa officials are consulting with experts to determine the possible ramifications for Iowa farmers, Northey stated.
"Many Iowa farmers, who sold grain and received payments in the 90 days prior to the VeraSun bankruptcy filing on Oct. 31, 2008, have received a letter from a New York law firm. If you have received the letter from the Silverman Acampora law firm you need to seek out an attorney for legal advice, preferably a bankruptcy attorney. Contact your attorney before you respond to the letter. Don't sign anything until you have contacted your attorney; but, it is important to not ignore the letter."
While most of the VeraSun bankruptcy case has been closed as ethanol plants have been sold to pay creditors, the company continues to have an open bankruptcy case in Delaware. Often, as a bankruptcy case winds down, creditors will send letters demanding payment from people or companies that received payment shortly before the bankruptcy case began.
Lawsuits are being filed by creditors claiming producers were given improper preferences in payments, even though farmers in some states who had delivered grain to VeraSun shortly before the bankruptcy ended up being reimbursed for lack of payment by a state indemnity fund.
VeraSun Energy filed for bankruptcy in late 2008 after quickly growing to become one of the largest ethanol companies in the country. The company had been caught up in the rise of corn prices that caused a third-quarter financial loss of about $100 million before seeking bankruptcy protection. Fearing corn prices would stay high or even rise further, VeraSun signed contracts with farmers that locked in high prices before the fall 2008 economic collapse that cooled off commodity markets and brought down corn prices.
NCGA posted a guide to responding to VeraSun on the group's website. The guideline states farmers should determine promptly if the letter is correct "or whether you have defenses."
"Determine if the facts in the letter are correct and how much VeraSun paid you in the 90-day period prior to VeraSun's bankruptcy filing on Oct. 31, 2008," the NCGA posting states. "If you received less than the amount demanded during the 90-day period, then that is your first defense to the extra amount claimed."
NCGA also recommends that farmers determine whether the payment was received in the "ordinary course of business" and whether there were any shipments for which farmers were not paid.
If a farmer doesn't respond to the letter, the producer risks potentially being sued in Delaware where the bankruptcy case was filed. " | |
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Verasun-or, how 90% of lawyers give the rest a bad name-
