It only takes one domino to fall to cause a chain reaction of events – then more dominoes will likely start to fall.
The first domino to fall in the Express Grain Terminals bankruptcy case appears to have been a lawsuit filed on Sept. 28 by Kansas City-based UMB Bank against the Leflore County-based company.
Express Grain Terminals, Express Grain Processing, Express Biodiesel, Dr. Michael Coleman and his son John Coleman were all sued in Leflore County Chancery Court that day. The suit stated that Express Grain Terminals had defrauded the bank out of $75 million dollars through phony reports and receipts. The action forced Express Grain Terminals to file bankruptcy the very next day.
After a little over a month, the bank withdrew the suit on Nov. 3 of this year.
Now, with his company in bankruptcy, Express Grain Terminals President John Coleman has been looking for help. The company filed for bankruptcy right as harvest was wrapping up, leaving hundreds of Delta-area farmers without payment for their hard-earned work.
In addition to the bankruptcy case, there is a class action suit that was filed over a week ago by Delta-area farmers against UMB.
This past week, Coleman responded to The E-T via email about the bankruptcy situation.
Coleman has spent a lot of sleepless nights since filing for bankruptcy, and that will likely continue until he finds the equity partner he is seeking that he says will eventually make farmers whole.
“We are currently operating the soybean oil mill,” he said. “My primary goal is getting investors in to recapitalize the business. Margins on crushing are extremely healthy right now, and there is a lot of liquidity in the financial system.”
Coleman is optimistic this partner will come along soon.
“It’s a good time to be looking for equity capital,” he said. “What I’m looking for is a partner who will take care of the debt and will help us build a larger, more modern plant, and have plenty of working capital. This way we don’t run into a situation like this again. We have several groups that we are in discussions with – some strategic, some pure money like hedge funds. I feel good that one of these works out, and everyone gets paid, but I can’t guarantee it.”
In working with the bankruptcy court, he noted, “We also have hired a Chief Restructuring Officer (CRO) that was approved by the court to come in and help with the administrative work of the bankruptcy. The CRO also reports to the creditors daily on operations and finance, so that everything is transparent.”
There is also pressure from farmers who would rather have Express Grain Terminals liquidate its assets and pay off creditors (Chapter 7) rather than reorganize under Chapter 11. Chapter 11 generally gives a business the opportunity to reemerge as a healthy business. But it takes longer, is more complex and is the more expensive route.
“There is a group of farmers that have made a motion to appoint a trustee and convert the case from Chapter 11 to 7,” he said. “The hearing for this is on the (Wednesday, November) 17th. I personally don’t think the judge will allow this. If a liquidation event must occur, it would be much better if the plant is running and we have time to market the business which brings in more cash for all creditors. Plus, there is also 160 jobs at stake, so we don’t want to be hasty in the decision of shuttering the plant.”
The results of that hearing were not known as of press time.
Coleman said he believes relief for his company and the farmers will come sooner rather than later.
“We could have a positive announcement before year end,” he said. “If we don’t find the equity partner in that time frame, but we are seeing positive cash flow, then it may be possible to get financing to continue operations under Chapter 11, with a restructuring plan. This plan would include paying farmers and other creditors over time while we continue to look for equity for the quicker payout.”
As a Delta native from Greenwood, Coleman personally knows many of those affected by his company’s bankruptcy.
In an article written by the Greenwood Commonwealth recently, Coleman stated that he had received threats. He has not filed any charges in the matter, he said, but he’s taking the threats seriously.
“I’m from the Delta and know most of the farmers we deal with personally,” he said. “I certainly want this to succeed and am working day and night, leaving no stone unturned. I can’t stand the thought of not being able to make everyone whole. I won’t stop until that happens. That’s just how I was brought up.”
Time will tell, but the clock is ticking for farmers as they need to plan and prepare for next season’s crops.
Without the money they are owed to pay for loans and work from this past season, many could lose what they’ve worked their whole life for dating back several generations.
If you have information about this story, please contact Mark Stowers at 248.298.9444 or email, writerstowers@gmail.com.
