Kansas City, Mo. ? Bankrupt Farmland Industries Inc. can strip away millions of dollars worth of benefits for former executives, but cannot touch life insurance for 2,200 retired workers, a judge has ruled.

Farmland, which was weighing whether to challenge U.S. Bankruptcy Judge Jerry Venters’ ruling, sought to eliminate the benefits as part of its effort to reorganize under bankruptcy court protection.

Venters ruled late Wednesday that retiree insurance policies are protected while the company is in bankruptcy, although Farmland could cancel the insurance policies and other retiree benefits after a reorganization plan is approved.

Farmland officials said the ruling means the company, which filed for Chapter 11 bankruptcy protection last May, would recover $9.7 million instead of the $16.5 million it had sought. Kansas City, Mo.-based Farmland, which is the nation’s largest agricultural cooperative, would be allowed to pay off $26 million in liabilities created by the benefits ahead of other unsecured creditors.

Farmland retiree Robert Martin, 69, who worked 40 years at Farmland’s oil refinery in Coffeyville, Kan., said the decision to strip executive perks while sparing former front-line employees is just.

“I spent the bulk of my working life there, and that insurance was part of the retirement package, part of the inheritance,” Martin said. “When the time comes, that is the money for my wife to bury me with.

“As far as those other guys, they probably had golden parachutes that were probably in excess of what they need.”

The judge granted Farmland’s request, filed in January, to stop payment on about $2 million due to former CEOs Harry Cleberg and Bob Honse and two other former Farmland executives. The money was part of the separation packages they were to receive when leaving the company.

Venters said Farmland also could reclassify almost $17 million in deferred compensation and retirement adjustment payments owed to 138 current and former professional-level employees. Cleberg is owed about $2.8 million under the deferred compensation program, which is money employees chose to receive at a later date for tax reasons. If the program is canceled, those former employees become unsecured creditors.

Cleberg could not be reached for comment. An attorney for Honse refused to comment.

Venters agreed with Farmland that the benefits for executives and other professional-level employees were not protected. Bankruptcy law, however, recognizes “that retirees as a class are unique in a bankruptcy proceeding and that they are deserving of special protection,” Venters’ ruling said.

“Unlike businesses and trade creditors, retirees are unable to set aside reserves for possible losses or to pass along their losses to other customers.”

In its most recent securities filing, Farmland listed assets of $1.4 billion and liabilities of $1.4 billion for its operations included in the bankruptcy. Farmland’s beef business is not included in the bankruptcy.

With the sale of its fertilizer business and other assets, Farmland says it has paid down its bank debt from $430 million last May to less than $30 million.