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Archive for Wednesday, December 11, 2002

Farmland settles fire insurance claim

December 11, 2002

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Farmland Industries Inc. will collect at least $2.3 million in insurance proceeds as payment for a fire in 2000 at its fertilizer plant in Lawrence.

The farm cooperative is actually owed almost $3.2 million from six insurers, but one of those insurers, like Farmland, is in bankruptcy.

A payment of $792,738, about 25 percent of the claim, is owed by bankrupt Reliance National Insurance Co. Farmland will file a claim in the Reliance bankruptcy, but the chances of collecting are uncertain, Laurence Frazen, an attorney for Farmland, told the court.

U.S. Bankruptcy Judge Jerry Venters approved the settlement during a hearing Tuesday.

When Farmland filed for bankruptcy protection from creditors on May 31, it listed assets of $2.7 billion and liabilities of $1.9 billion. Those figures, however, included partnerships, such as its beef production company, that were not part of the bankruptcy. As of July 31, the businesses that were part of the bankruptcy listed assets of $1.47 billion and liabilities of $1.67 billion, still the largest bankruptcy of a Kansas City business.

Last month, the farmer-owned cooperative reported a record net loss of $346.7 million for fiscal 2002, which ended Aug. 31. That included $155.2 million in write-downs and reorganization charges emanating from its bankruptcy. Farmland reported a loss on operations of $182.6 million.

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