Turner Grain Merchandising Inc. of Brinkley has filed for Chapter 11 bankruptcy protection, listing nearly 60 farmers, grain dealers, trucking companies and other entities with outstanding claims worth tens of millions of dollars.
Thursday's filing for the company, doing business as Turner Grain Inc., lists $13.8 million in assets and $24.8 million in known liabilities -- a figure that could grow once the amount of more than a dozen "unknown" claims is determined.
The filing was submitted by North Little Rock attorney Kevin Keech, who was appointed as receiver for Turner on Sept. 11 as part of an unrelated breach-of-contract suit in federal court. Keech took possession of all property, documents and electronic files held at Turner Grain Merchandising.
Turner's bankruptcy filing identifies one creditor as having a secured claim: Rabo AgriFinance of St. Louis, which filed a suit Sept. 10 in U.S. District Court to recover $1.01 million it says it is owed for a line of credit it granted Turner before its shutdown.
In addition to Rabo's claim, the filing identifies 43 farmers, agriculture businesses and others as holding unsecured claims to Turner assets with a combined value of $23.8 million. Another 16 creditors are listed as having "unknown" amounts at stake while 234 others have claims valued at "0.00."
The filing lists Turner Grain Merchandising's officers as Jason Coleman, president, and Dale Bartlett, vice president. It said each owns 50 percent of the company but noted Bartlett's 50 percent share is in dispute. On Oct. 6, Bartlett filed for personal bankruptcy under Chapter 12 of the bankruptcy code, which involves "family farmers" and attempts to set up a plan to allow them to repay all or part of their debts over a three- to five-year period.
Keech did not return several phone messages left with his office.
Turner Grain Merchandising and related firms have been under scrutiny since Aug. 14, when the U.S. Department of Agriculture shut down a grain elevator run by the company after finding no grain being stored there despite certificates saying otherwise.
After the shutdown, Turner Grain was named as defendant in several lawsuits after farmers complained that the commodities broker failed to pay them for grain worth millions of dollars and after receiving checks from Turner that couldn't be cashed.
The bankruptcy filing lists 19 other co-debtors, including Coleman, Bartlett, and 12 represented by Little Rock attorney James Tilley. A spokesman for Tilley referred questions about the filing to Keech.
Don Campbell, an attorney representing the grower with the largest claim listed in the filing, Zero Grade Farms of Blytheville, said Friday that it could take several years to resolve the bankruptcy case, given the number of claims and various lawsuits pending against Turner Grain and related companies.
Zero Grade, which is listed as having a $2.3 million claim against Turner in the bankruptcy filing, filed a breach-of-contract suit in Lonoke County Circuit Court on Aug. 22 against Turner Grain Merchandising, Coleman, Bartlett and 11 other defendants seeking to recoup more than $6 million in losses.
He said the gap between Turner Grain Merchandising's assets and liabilities could result in co-defendants in the ongoing lawsuit covering the difference if his client prevails.
The bankruptcy document indicated that Turner Grain Merchandising has $13.7 million in assets, including $309,658 held in an account with Helena National Bank. Other assets were reported as $6.5 million owed by Gavilon, an Omaha, Neb.-based firm that said it sold the grain it acquired to Tyson Foods, as well as another $1.2 million owed by KBX of Benton for grain and $1 million owed by Windmill, Carlson Mills and Anheuser Busch for rice deliveries. A spokesman for Gavilon has said the company has met its contractual obligations and doesn't owe Turner any money.
The filing also identified seven breach-of-contract suits pending against Turner -- six filed in various circuit courts and one in U.S. District Court. Current suits involve claims by four farming operations, including Zero Grade, as well as farms in Lee, Arkansas and Monroe counties. The bankruptcy filing did not mention a separate federal suit filed by six Mississippi farmers seeking $1.7 million.
Also, it identified two suits involving grain dealers that did business with Turner Grain. Kennedy Rice Dryers LLC of Mer Rouge, La., and Planters Mill LLC of Abbeville, La., are seeking nearly $3.1 million in a federal suit. And, in a suit filed Sept. 15 in Poinsett County Circuit Court, Southern Rice and Cotton of Harrisburg is seeking $3.2 million.
State Agriculture Secretary Butch Calhoun said Friday that he expects the overall losses experienced by growers to increase, given the number of creditors with unknown claim amounts.
"It's bad. There's going to be some deep repercussions from it for a long, long time," Calhoun said, adding he was most surprised by Turner Grain Merchandising's gross revenue reported in the bankruptcy filing: $223.8 million in 2012; $277.9 million in 2013; and $235.3 million in 2014 at the time of the filing.
Calhoun said growers who did business with Turner Grain and never were paid for their crops are being caught in a cash crunch.
"This is money that was owed to them for last year's crop for most of these guys," said Calhoun. "They're going to have to wait until they get their crop out now and see where they go from there."
Already, 23 farming operations have been granted extensions to repay federal marketing assistance loans used to allow growers to delay selling crops immediately after harvest so they can wait for commodity prices to rise. Kent Politsch, a spokesman for the USDA's Farm Service Agency in Washington, said combined, the loans were worth slightly more than $3 million.
Matt King, an economist for the Arkansas Farm Bureau, agreed with Calhoun that Turner Grain Merchandising's troubles will ripple across farming communities.
King said the operations that got federal bridge loans are only a few of those affected by Turner Grain. He said people who stored portions of their 2013 crop waiting for prices to rise thought they had it covered.
Now, the growers as well as suppliers such as fertilizer dealers and aerial applicators haven't been paid, he said.
"You're going to have a trickle-down effect with some of this because there are people who had some of last year's crop they held onto waiting for a higher price and when ... a higher price came, they never got paid for that."
However, King said grain merchandisers such as Turner Grain are scattered around Arkansas, and there are a few based outside of Arkansas that do business with state growers. He said they provide a "vital service" connecting growers with buyers.
"For the most part, these guys are very trustworthy and good businessmen," King said. But, given the situation with Turner Grain, farmers will be more wary.
"You may have a little more caution from some of the growers out there because of what's happened in this situation, but producers will continue to utilize some of these grain merchandisers," he said.
A Section on 10/25/2014