Express Grain Terminals and Affiliates File for Chapter 11 Bankruptcy Protection
Greenwood, MS-based soybean processing, biodiesel, and grain storage company lists as much as $100M in debt to lenders, farmers and other creditors
Express Grain Terminals, LLC, Express Biodiesel, LLC, and Express Processing, LLC (collectively “Debtors”) (along with individual John Coleman, President) (“Individual Debtor” or Coleman”) filed Chapter 11 Voluntary Petitions on September 29, 2021 in the U.S. Bankruptcy Court for the Northern District of Mississippi. The company employs 180-200 people in the Mississippi Delta. EmergeLaw partners Courtney Gilmer, Robert Gonzales and Nancy King have been monitoring the proceedings on behalf of several famers and other stakeholders.
Express Grain Terminals operates an oil mill in Greenwood and lists assets and debts between $50 million to $100 million. Express Grain originates grain from producers at three locations in central Mississippi, and ships corn by truck and rail to markets in Mississippi, Alabama, and to exporters on the Gulf. The company also processes soybeans, extracting the oil some of which is further processed to biodiesel on site or sold to animal feed producers or other biodiesel plants. The soybean meal and hulls are fed to area poultry, catfish, swine, and cattle feed mills and producers.
The bankruptcy filings come at a crucial time for Delta famers in the midst of harvest season and there are critical, time-sensitive payment issues that need to be addressed for farmers as well as other unsecured creditors. Why this company needed bankruptcy protection so soon after taking out a $40,000,000 Revolving Note and a $35,000,000 Term Note in favor of UMB Bank, N.A. is unknown at this time. CEO John Coleman commented that despite the filings, it is business as usual.
No traditional “First Day Motions” were filed in the cases, but UMB Bank filed a Notice stating it did not consent to use of cash collateral. The Debtors then filed an Emergency Motion requesting Use of Cash Collateral to meet certain necessary expenses using cash collateral. The motion was filed on October 4, 2021 and a hearing was held less than 24 hours later.
At the outset of the hearing, counsel for the Debtor announced that an agreement had been reached with UMB for the limited use of cash collateral through October 13, 2021 when the next hearing will be held. The agreement called for enough money to be used, according to an approved budget, to pay employees of the business (but not Mr. Coleman), but specifically removed the payments to farmers who have and continue to sell their crops during harvest time to Express Grain. After some concerns and questioning of Mr. Coleman, it was revealed that Express Grain has at least two Commodities Contracts that may or may not be able to be paid back, potentially some warehouse receipt holders storing grain, and that the Debtors did not have an accurate assessment of inventory.
All parties acknowledged the complexity of the priority of lien issues with a $75,000,000 secured lender, the existence of the commodity brokers, the potential of warehouse receipt holders, and the farmers who have not been paid. To complicate matters, many local and regional banks have production loans for farmers’ crops that are dependent upon Express Grain paying the farmers. All priority lien issues and really all substantive objections were reserved to be heard at the October 13, 2021 hearing.
After a recess, the hearing was resumed again at 4:00pm telephonically for the Debtors to address how they intend to pay the farmers since UMB refused to allow its cash collateral to pay on the farmers’ contracts. At the resumed hearing, which was quickly defined as a status conference only, the following key factors were revealed:
The Debtors proposed to have farmers with executory contracts deliver their crops post-petition to Express Grain where it would be specifically segregated as post-petition grains; it would be shipped out by train within 48 hours, and farmers would be paid within 10 days of delivery of the product to Express Grain.
Most farmers, who all hold varying contracts with Express Grain, are reluctant to abide by that proposal without some sort of court order or assurances that they will be paid for the post-petition crops that they deliver.
Complicating matters even further, StoneX Commodity Broker is claiming that they have warehouse receipts for grain that they say they own likely exceeds what the Debtors have in their silos meaning that ownership of the grain that is co-mingled may be disputed requiring StoneX to take some form of emergency action to protect what it claims to be its property subject to repurchase rights of the Debtors.
The Judge, recognizing that there were complicated issues that could not be solved in an afternoon status conference, continued the status conference until Friday October 15 at 10:30am to be held telephonically.
There are some very complex and difficult issues ahead in this bankruptcy case, and the livelihood of so many farmers, vendors, and banks are affected by what happens in the Express Grain bankruptcy proceedings.