Bankrupt grain group to pay farmer / LJWorld.com

Archive for Sunday, November 2, 2008

By Amy Bickel - The Hutchinson News

November 2, 2008

U.S. Bankruptcy Court earlier this week awarded to a western Kansas farmer some of the money from the sale of grain from a bankrupt Tribune elevator group.

Farmer Gilbert Bishop claimed ownership interest in wheat sold to the now defunct Sunbelt Grain, valued at $18,000, according to court documents filed this week.

Bankruptcy Court Trustee Steven Speth disputed the validity of the claim, according to the documents. However, the two parties agreed to resolve the conflict through payment of $12,000 to the Gilbert Bishop Revocable Living Trust.

Security State Bank of Scott City foreclosed on Sunbelt Grain in December, claiming owners Jim and Kathy Shafer were in default on a $4.9 million loan the couple used to purchase the facilities in 2006. The bank, along with two farmer creditors, then forced the group into bankruptcy.

In a separate case filed Feb. 13, the bank alleged the Shafers and Shafer Farms owed another $3.43 million that the couple borrowed between 2006 and 2007.

The bank took assets from the sale of machinery, Sunbelt's elevators and some of the land to offset their liabilities. However, the sale of the elevator's grain, which netted $3.785 million, has been the biggest center of debate.

Security State Bank claimed it should receive about $3.2 million netted from the sale of the grain. However, in an order signed by U.S. Chief Bankruptcy Judge Robert Nugent on Aug. 28, the court awarded the bank $1.1 million.

It could be months before it's decided who gets the remaining $2.7 million, Speth told The News in September.

Besides the bank and Bishop, owners of Wichita County feedlot Whitham Farms seek $2.2 million for 524,000 bushels of grain paid for but never delivered. The elevator also owes $2 million to 33 farmers who deferred payments of their bumper wheat and fall crops until 2008.

Being unsecured creditors, the producers will be the last to receive payment - if any money is left after the bank and others take their shares.