Farmer's debt tops cap on Chapter 12

Turner Grain chief’s filing lists $5.5M

FILE — The Turner Grain storage facility near Brinkley was shut down in 2014 by U.S. Department of Agriculture agents when they found no grain inside despite documents indicating otherwise.
FILE — The Turner Grain storage facility near Brinkley was shut down in 2014 by U.S. Department of Agriculture agents when they found no grain inside despite documents indicating otherwise.

Dale C. Bartlett, president of Turner Grain Merchandising Inc. -- which is embroiled in its own financial problems -- filed paperwork Monday night in U.S. Bankruptcy Court for the Eastern District of Arkansas in an attempt to protect his family farm.

But the filing shows that what he says is farm debt exceeds the limit set by U.S. Bankruptcy Code for Chapter 12.

That will likely lead to a challenge by his debtors and dismissal of the petition, said Susan Schneider, a Chapter 12 expert and director of the Agricultural and Food Law program at the University of Arkansas at Fayetteville School of Law.

Bartlett is trying to save his farm while his business operation is under court-ordered receivership and faces lawsuits seeking $15.7 million in claims that allege the business purchased grain but did not pay the sellers nor return the grain. To date, there have been no corporate bankruptcy filings in the Turner Grain default.

In the bankruptcy filing, which Bartlett made Sept. 5, he lists about $5.5 million in debt.

That exceeds the debt limit set by Title 11 of the U.S. Code under Chapter 12, currently $4,031,575, which is adjusted periodically to reflect the consumer price index.

Bartlett's bankruptcy attorney, Frederick Wetzel of Little Rock, said in an interview Tuesday only that "there's a whole lot of conditions in the statute" that relate to the debt limit.

Chapter 12 bankruptcy protection is designed to protect family farms.

U.S. Bankruptcy Code Title 11, Section 109, Subchapter 18 states, in part, that the term "family farmer means ... an individual or individual and spouse engaged in a farming operation whose aggregate debts do not exceed $4,031,575."

Brinkley-based Turner Grain and a number of other related firms have been sued for $15.7 million in four cases since U.S. Department of Agriculture agents shut down a grain storage facility near Brinkley on Aug. 14 when they found no grain in the elevators despite certificates on the premises saying otherwise.

Lawyers for claimants in two lawsuits have said that the defendants -- as many as 15 firms, including Turner Grain -- owe about $8 million to Lonoke County farmers and approximately $3 million to farmers in a Lee County case.

Arkansas farmers filed lawsuits in circuit courts in Lee and Lonoke counties on Aug. 18 and Aug. 22, respectively, and grain processors in Louisiana sued Sept. 5 in Monroe County Circuit Court.

A lawsuit by six farming operations in Mississippi filed a claim for more than $1.7 million in U.S. District Court for Eastern Arkansas on Oct. 2.

Two of the debtors named in the document filed Monday night by Bartlett are claimants in suits against Turner Grain and the other defendants.

Kennedy Rice Dryers LLC of Mer Rouge, La., is listed in the Bartlett filing as claiming $2,372,915.70, the exact amount sought in the Monroe County complaint.

Planters Rice Mill LLC of Abbeville, La., is listed as claiming $698,924.16. Planters Rice is a claimant in the Monroe County case for that precise amount.

Rabo Agrifinance Inc. of St. Louis is listed in the bankruptcy filing as a debtor for $1 million. Rabo sued Turner Grain, Bartlett and Jason Coleman, a partner in Turner Grain, for $985,140 on Sept. 10 in U.S. District Court for Eastern Arkansas.

Asked how Bartlett could claim as personal debt what is being sought by two corporations, Wetzel said that Bartlett is "required to disclose anything ... where he potentially has liability personally."

Asked if the duplication of debtors and amounts in the lawsuits and bankruptcy petition was contradictory, Wetzel said: "The schedules say what they say. Whoever wants to read them can interpret them however they like."

Schneider says she knows of no Chapter 12 court decision that has not cited the debt limit in upholding a challenge to such a petition.

Bartlett lists assets totaling $1,998,189.55, including $1,031,500 in real property, including the residence where he and his wife live in Marvell, and $966,689.55 in personal property.

A Section on 10/08/2014

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