Archive for Tuesday, October 24, 2000

Co-op to sell ‘some’ assets to help pay off debts

Unsecured creditors have access to grain in storage, but judge could order its sale to help owners

October 24, 2000

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— If the Farmers Cooperative Assn. is to make money for the first time in more than a decade, it will have to sell some of its least productive assets, officials said Monday.

The recent sale of elevators in Leavenworth and Tonganoxie for $15,000 and $7,500 each was only a start.

"We have some assets to be sold," said Don Dumler, the co-op's president and chief executive officer, during a hearing in the U.S. Bankruptcy Court. "There will be some down-to-earth decisions made. We'll get down to the core."

While Dumler's discussion was short on specifics, it offered a glimpse at the decisions ahead for the Lawrence-based cooperative, 2121 Moodie Road, and its more than 3,500 members as they muddle through early stages of their Chapter 11 bankruptcy case.

The co-op owes up to $20 million, including more than $10 million to a cooperative bank that had loaned the organization money for operations. The co-op has grown from its Lawrence roots in 1953 to include 19 locations, from Burlingame to Rushville, Mo.

"Perhaps it was a case of becoming too big too fast," said John Cruciani, a bankruptcy attorney representing the co-op.

During Monday's hearing, about 100 creditors and their representatives crowded into an assembly room at the U.S. Bankruptcy Court in Kansas City, Kan., to hear from the co-op's executives and their attorneys.

Among Monday's developments:

A Creditors' Committee has been appointed to represent the interests of unsecured creditors in the case. Members are Jim Carpenter, Eudora; Byron Finley, Edgerton; Richard Knabe, Eudora; R. Edwin Longanecker, Edgerton; Darin Dahl, representing Burlington Northern Railroad; Ron Osgood, Harrisonville, Mo.; and Joe Weiler, representing the Jean A. Knipp Trust in Topeka.

The trust is the case's largest unsecured creditor. The co-op owes it nearly $364,000.

Judge John Flannagan extended the deadline for filing of case schedules, which outline creditors and the amounts each are owed. The schedules which could be up to 500 pages long, Cruciani said now are due Monday.

While co-op attorneys promised that the organization would release any grain that has been held in open storage by farmers, Flannagan hinted that he could order the sale of such grain to satisfy claims of creditors. Flannagan has yet to receive such a request, which would be required before he could consider making such a ruling.

"All I can say is you might want to consult with counsel," Flannagan told dozens of creditors in an informal meeting following Monday's hearing. "And by the way, if you do that, get someone with some experience with bankruptcy law."



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