Thursday, January 6, 2022

Express Grain & UMB Try to Block Investigation

 UMB Bank and Express Grain are trying to stop Agriculture Commissioner Andy Gipson's investigation of the failed grain operator.  The Commissioner said Express Grain obtained its license to operate through fraud and asked the bankruptcy court's permission to investigate.  The grain elevator and its lender in turn asked the Court to block any investigation or revocation of the Express Grain license even if fraud took place.

Mississippi requires grain elevator operators to obtain an annual warehouse license. The grain elevators must pay a fee and submit audited financial statements. Horne LLP audited the company and submitted the audits to Express Grain.  Express Grain in turn submitted a different set of financial statements to the Department of Agriculture & Commerce.

Commissioner Gipson discovered the submission of the phony documents last month.  However, the bankruptcy court issued a stay against all proceedings against Express Grain.  The Commissioner asked the Court's permission to investigate the submission of the phony financial statements. He argued federal law provides a specific exception for government investigations and prosecutions in bankruptcy stays. Earlier post.

The Commissioner didn't stop with his fight to revoke the license but also asked the court to block a $30 million loan to the company from UMB Bank. Express Grain asked the Court on December 20, 2021 to approve a $30 million loan to the bankrupt company.  The company says it needs a loan so it can pay farmers when they deliver their crops to the grain elevator and continue operations and continue operations.  Farmers are now requiring immediate payment upon delivery of their crops.  If approved, UMB would move to the front of the creditor line in bankruptcy court. Express is in default to UMB for loans of $70 million.

The Commissioner said he intends to revoke the Express Grain license since the company submitted fraudulent financial statements. Without a license, the company will be out of business and thus there will be no need for a loan.

UMB said revocation does not protect the public:

MDAC’s  commencement  or  continuation  of  regulatory  and/or  judicial proceedings to suspend, cancel, or revoke the Grain Warehouse Licenses issued to Express Grain does not protect the public safety and welfare and thus should not be excepted from the automatic stay under section 362(b)(4).  MDAC makes no allegations in its pleadings that there is a risk to the public safety and welfare by the ongoing operation of the Debtors’ operations, which are being capably managed by the CRO and under the close supervision of the Bankruptcy Court....

 Likewise, in this instance, MDAC has asserted no health, welfare,  moral, or safety violations that would warrant the revocation of the Grain Warehouse Licenses. Rather, MDAC’s potential  investigation  and  subsequent  determination  regarding  the  Grain  Warehouse  Licenses centers on Express Grain’s failure to provide timely and accurate financial statements to MDAC under the Grain Warehouse Law. While the statute requiring a grain warehouse to provide MDAC with annual financial statements is regulatory in nature, it does not relate to matters of public safety and health. To the extent licensing does relate to matters of public safety and health, any risk to the public has been mitigated due to the Court’s supervision and the Court’s appointment of a Chief Restructuring Officer....

 The bank also argued the management that allegedly committed the fraud is no longer in control of the company.  

Express Grain joined the fight to block the Commissioner's investigation.  It said it has not

Debtor's counsel has not yet received from the Department what the Department contends it received from the Debtor, and therefore it is unable to admit the authenticity of the document mentioned in Paragraph 8 of the Motion. 

The company said revocation would throw employees out of work and prevent vendors from being paid (Sounds like a great argument for not busting a drug cartel, doesn't it?).  Creditors will be harmed as well as revenue will cease.  

A hearing on the Commissioner's motion was scheduled for today but it is postponed to January 25.  The motion on the approval for the UMB loan will be held after the Commissioner's hearing.  

Express Grain Posts

Express Grain prez won't talk.  

Express Grain shuck and jive continues.  

Commish moves to block Express Grain loan.  

Commissioner wants to revoke Express Grain license for fraud. 

Express Grain Update: Fraud! 

Senate Committee holds Express Grain hearing. 

This week on the podcast: Express Grain 

Shucking & jiving to bankruptcy. 

Express Grain Prez threatened. 

Express Grain collapse over $100 million. 

Lawyered up?  

Lawsuit: Express Grain shucked bank out of $71 million. 

Were Delta farmers shucked and jived? 


Kingfish note: There might be a few farmers and banks who disagree their safety and welfare was protected when Express Grain fraudulently obtained a license.  Isn't the purpose of an investigation to determine whether any wrongdoing took place.  How can MDAC "assert" any violations if it can't investigate? 


P.1: Commissioners motion to stay proceedings so he can investigate

P.8: Motion to approve debtor in possession loan

P. 30: Commissioner's objection to motion for loan approval

P. 38: UMB objection to Commissioner's motions

P. 45: Express Grain to Commissioner's motions




 Express Grain Terminals opened in 2007 and is a major grain elevator in the Mississippi Delta. Dr. Michael Coleman and his son John Coleman own Express Grain Terminals although John's share is 1%.  Express Processing open in 2015 and Express Biodiesel opened in 2018. Express Grain owns the two companies.

Express Grain ran into some financial trouble a year ago. Several farmers complained to MDAC in December 2020 that checks for their harvest bounced. However, the company made good on the checks. However, the company owed over $70 million to UMB Bank. The company submitted phony financial statements to the state when it renewed its license in the spring of 2021. Word circulated among Delta farmers during the harvest season that the company was in trouble. 

Express Grain President John Coleman assured farmers everything was okay in a September 28 letter:

UMB Bank sued the company for fraud on the same day in Leflore County Chancery Court.  UMB had issued a $40 million revolving loan and a $35 million term loan to the defendants. The bank extended the loans several times. The bank allegedly caught the company submitting false financial statements. UMB declared Express Grain in default on loans of $71 million. The lawsuit sought repayment of the loans and asked the Chancellor to place the company into receivership. Earlier post. 

Express Grain filed a petition for Chapter 11 bankruptcy the next day. 

 The company reports total liabilities of $106 million in assets of $101 million. However, the company owes another $9 million to farmers. The secured claims are $70 million while unsecured claims are $36 million.  Total amount owed to farmers is $41 million.  The top twenty unsecured creditors report  claims of over $23 million. 

 The damage does not stop with farmers losing their crops. More than a few banks place liens on harvests when farmers borrowed against them. The bankruptcy means those banks could lose the collateral on those loans.

Some farmers have gone to court to get their harvests back. They accused the bank of keeping the broke borrower afloat just long enough to steal the harvests delivered to the grain elevator without paying for them Earlier post. 

 Commissioner Gipson said Express Grain submitted phony financial statements when it applied for the renewal of its license. He obtained copies of the audited financial statements for the last three years from the company's accountant, Horne LLP, and compared them to those filed with his agency. The Commissioner said the true audits show the company was suffering a $20 million loss while those filed with his office showed a thriving company. The auditors also stated in their notes that it was doubtful the company could continue "as a going concern." 

The Commissioner asked the Court's permission to investigate the company and made it clear he wants to revoke Express Grain's license.


Anonymous said...

Is then Horne complicit? Shouldn't Horne have direct filed with MDAC?

Anonymous said...

Attn 11:29 AM Which Jackson schools did you attend? Your writing and grammar are a little below par.

Anonymous said...

So, Coleman's attorney filed a motion to dismiss his own bankruptcy on his way into the creditor's meeting, refused to allow his client to answer questions, and cited his own motion as the basis for a continuance.

Now, Coleman's attorney asks the court to approve a deal whereby Express Grain would get another loan from UMB for $30 million, in return for allowing the bank to jump in front of all other secured creditors with a priority lien.

Did I get that right? If so, it's gotten pretty slimy, and will likely get worse.

Anonymous said...

It could be that keeping the business running while trying to attract investment capital might be in the best interest for all parties involved. I hear the company is making money right now because margins have turned up.

Anonymous said...



Horne did not preform the audit FOR the MDAC, their client was Express Grain.

What EG did with the audit - i.e. submit it to lenders, submit it to MDAC, submit it to stockholders, submit it to potential investors - is in the hands of EG.

Besides not knowing what school taught you English Comp, as 12:30 noted, did you proceed from there to the Don Barrett school of law where they taught you to try to find deep pockets to sue when the culprits' pockets are damn shallow.

Anonymous said...

All this is going to bringing federal heat to the issue. Keep stirring the pot and the water is only going to get hotter.

Anonymous said...

What a mess. Good job keeping up with this KF.

Cbalducc said...

Are the Colemans politically connected?

Anonymous said...

I see 2 scenarios:

Scenario 1 - Express Grain is broke, but didn't do anything fraudulent. So they can deal with banks, farmers, etc. through court. And maybe they get additional capital and reorganize and keep doing business and everybody eventually gets paid.

Scenario 2 - Express Grain committed some fraud. If they falsified any documents at all (I don't care if it's just one line on one document), then their license should be revoked. They shouldn't be operating. You can't give a license to a crook simply because you want "employees to stay employed" or "creditors to get paid". If they submitted phony documents to the Ag Commission, then the Ag Commission should absolutely yank their license. Anybody that thinks differently is an idiot.

Anonymous said...

It also looks to me like the Dept. of Ag. and Commerce has argued that Express Grain's licenses were void ab initio due to fraud in obtaining the licenses, meaning the licenses were never valid, so that UMB's warehouse receipts for 1.2 million bushels of soy beans are worthless, as the product of fraud and issued without valid licenses.

UMB and the Colemans, by and through counsel, have now cooked up a scheme to ratify the receipts and foreclose all of the farmers claims, in return for UMB loaning another $30 million and getting a first-priority lien against all pre- and post-bankruptcy petition assets. That would secure UMB's total loans of $100 millions against alleged total assets of $101 million. As long as no one else but UMB can get paid, the bank is made whole.

So, the bank will keep the company afloat, so long as everyone besides UMB is guaranteed to get screwed in the process.

The Ag. Department's position seems to be: let's first get a ruling on the validity of the licenses, then we'll know who owns what.

The Colemans continue to peddle their asses to whomever will pay.

If I have any of this wrong, someone please chime in and correct me.


Anonymous said...

Andy is likely out of his league. He is playing politics by revoking their license, which will turn this bankruptcy from a Chapter 11 to a Chapter 7. The farmers will then be the ones that lose the most.

Anonymous said...

6:21, What happens to the farmers' claims if the licenses remain intact, allowing the bankruptcy to remain a Chapter 11, which requires the additional UMB loan to continue operations? Wouldn't the farmers then get zero while UMB gets the right to take it all?? (unless, of course, UMB is really motivated by good will to protect the Mississippi farmers, instead of covering its own $100 million liability)

Anonymous said...

Andy hired Ed Lawler.

Anyone know this guy?

The bankruptcy bar in MS is tiny…..who is this guy?

Anonymous said...

7:20, that depends on the BK judge and all the parties, which would also be affected by any criminal events that have occurred. Suffice it to say there is more for recovery if the operations remain viable versus becoming a corpse with a scrap value.

Anonymous said...

7:15 a.m. The second to last sentence of the article posted above states as follows:

"The Commissioner said the true audits show the company was suffering a $20 million loss while those filed with his office showed a thriving company. The auditors also stated in their notes that it was doubtful the company could continue 'as a going concern.'"

So tell me again how extinguishing the farmers claims to allow the business to continue will benefit the farmers.

Then, please explain how the Colemans' proposed deal with UMB for an additional loan appears to be anything other than another power play for UMB to recoup as much of its losses as possible, to the detriment of all other creditors.

Are you suggesting that the farmers should rely on the possibility of restitution from a criminal action?

-7:20 p.m.

Anonymous said...

7:20, this type of bankruptcy has no script due to the fraud component. If a viable entity can emerge with operational assets, there is a revenue stream for the judge to work with. I suspect the bioenergy side was the venture that sunk them, plus the owners were apparently incompetent and now are criminals.

Anonymous said...

3:46, My point was that the entity appears to have not been viable for some time. Doubling down on Express Grain to now become viable and profitable, especially considering that the Colemans still own it, is probably not the best way to protect the claims of any creditors except UMB.

If the bankruptcy court declines to place that bet, I doubt that the farmers "will then be the ones that lose the most," (Jan. 6 at 6:21 p.m.). The licenses are either void ab initio, or they are not, and I don't think making that argument is "playing politics."

If the license are invalid, at least the farmers will have a chance at clawing back some assets, which they will not if this new loan deal gets approved.


Recent Comments

Search Jackson Jambalaya

Subscribe to JJ's Youtube channel


Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS