Creditors seek payments from farmers who sold grain to VeraSun

(a report from KEYC-TV, Mankato)

Farmers in South Central Minnesota thought they had seen the last of VeraSun when the company went bankrupt in 2008. Many were left with a fraction of the original contracts they had agreed upon with the ethanol producer. But as News 12’s Erick Lind reports, producers who got payment for their grain before the bankruptcy are now learning that creditors want some of that money back. Last week farmers and grain elevators started receiving letters in the mail from a bankruptcy lawyer out of New York. The letters asked for money owed that farmers had already been paid for in corn sold to VeraSun. Bob Zelenka with Minnesota Grain and Feed Association says some people threw them away, while others thought it was a hoax…but it’s not. Zelenka says, “That was the biggest question, whether this was a legitimate deal, and the answer is yes it’s a legitimate law firm and it’s a legitimate claim under the bankruptcy code.”Zelenka says there is a lot of money at stake… hundreds of farmers and millions of dollars in Minnesota alone. Zelenka says the notices are on the behalf of creditors who are trying to recover money paid out where preferential treatment was provided to certain creditors at the expense of others. He says that is where the defense will lie. Zelenka says, “Your clear defense really on this is by responding your main defense is you’ve done business with them in the ordinary course of business, something similar you’ve done previously, something in the contract, so that you can prove you didn’t receive any preferential treatment.”Zelenka says another defense may be that you are still owed money by VeraSun for corn that was sold after the company filed for bankruptcy and you were never paid for. He says the first thing is to consult with your legal counsel and make sure you send in the letter by the September 30th deadline. Erick Lind, News 12.

Our Take:

Here’s one more reason to emphasize local ownership in the farm-based energy industry. Volatility seems to hit the bigger publicly-owned companies harder and in a way that may be less predictable. And naturally, farmers get left holding the bag.

For all the farmers who sold grain to VeraSun in the months before its death throes, we hope a speedy and equitable resolution results.

For public policy makers and for supporters of the ethanol industry, we need to pay attention to means that can protect farmers in situations like these, and promote local and farmer ownership of these plants–that’s what gives a rural community the most bang for the buck.

The National Corn Growers Association (NCGA) has been coordinating this issue on behalf of our state associations. NCGA has secured the services of David Lander, an attorney with Thompson Coburn LLP of St. Louis. If you received a VeraSun letter or have related questions, Mr. Lander may be contacted at 314-552-6067.


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