Tuesday, January 11, 2022

Express Grain: Is the End Nigh?

 Express Grain warned its employees the company will probably shut down in the near future.  The Taxpayers Channel reported: 

At a "town hall" meeting today, Express Grain employees were notified in writing that the company may soon be shutting down, and they may be permanently laid off starting January 28th.

The notices were hand delivered to the employees by CR3 officials, the company that was brought in to manage EG during the bankruptcy. The letters, which have been seen by The Taxpayers Channel, were signed by CR3's Dennis Gerrard, who is the Chief Restructuring Officer hired by EG and approved by the court.

The notices are required under the "Worker Adjustment and Retraining Notification Act" (or "WARN"). This federal law is meant to provide workers notice before they are suddenly let go from their employment, so that they can obtain employment elsewhere if possible.

The letter reads, in part:

We must advise you that you may be laid off and it is anticipated that the layoff may be permanent.

The possible/expected date of the first separation is January 28, 2022, and the last separation is February 28, 2022. You should anticipate that your separation date is January 28.

The letter specifically references the company's "inability to consummate a debtor-in-possession financing transaction...."

The plan to borrow an additional $30 million to keep EG afloat was reported here: Express Grain wants to borrow another $30 million.

UMB Bank has been pushing hard, along with EG, to gain bankruptcy court approval for the loan, on the basis that the company is worth more when it's up and running, than were it to shut down. However, a host of creditors and farm lenders have strongly opposed the loan, and it has been put on hold.

The letter goes on:

...without the ... financing being approved and granted, Express Grain is unable to obtain and acquire additional soybeans to utilize in its manufacturing operation under which soybeans are crushed to yield soybean meal and soybean oil. Given this dramatic and unforeseeable situation, the company has made the decision to discontinue production, subject to further developments in this case such as the granting of the debtor-in-possession financing and/or other alternatives that will allow the company to maintain manufacturing and crushing operations.

The letter concludes that the company regrets this decision, and that it means the "layoff of loyal, dedicated and highly regarded employees."

It is with heartfelt sympathies and sadness that this action is necessitated, but economic circumstances mandate it.

Up to this point, the bankruptcy court has bent over backwards to accommodate EG's wishes to remain operational, and so much stress has been placed on the importance of it doing so, that it is unclear what reaction the court might have to this latest turn of events.

Kingfish note: There were two marathon hearings last week.  A couple of tidbits.  

* The Chief Restructuring Officer didn't know what the market prices were of soybeans or corn when asked in court.  He couldn't even make an estimate.  Something that makes one go hmmmm......

* The Commissioner asked the Court to lift a stay against proceedings so he could investigate whether Express Grain committed fraud in obtaining a Mississippi warehouse license.   A hearing is scheduled for January 25 in bankruptcy court.  However, Commissioner Gipson stated in court Friday that he will hold a hearing on whether to revoke the license on January 24.  

Express Grain Posts

Express Grain & UMB try to block investigation.

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?  


 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. However, Express Grain and UMB Bank objected to any investigation of the grain elevator.  


Anonymous said...

follow the $

Anonymous said...

Express Grain wants to borrow another $30 million.

C'mon, UMB wants EG to borrow another $30m.

From The Bleachers said...

From the letter to employees...

"Given this dramatic and unforeseeable situation..."

Say What? Who the fuck did not 'foresee' this coming?

Anonymous said...

"Given this dramatic and unforeseeable situation"..."It is with heartfelt sympathies and sadness that this action is necessitated, but economic circumstances mandate it"

F' these assholes playing the not our fault game.

Anonymous said...

Where's the Biden Bennie Bailout?

Anonymous said...

We aint got long…

Anonymous said...

@8:35, what in the hell are you talking about? If there has been one, identify it.

Anonymous said...

@8:30 and @8:34 stole my comment. I was going to say the same thing. There was nothing "unforeseeable" about this. The Colemans knew. They were just too chicken-sh*t to say it.

Anonymous said...

"...so that they can obtain employment elsewhere if possible."

Sure, in the Delta? These folks are screwed.

Anonymous said...

Employees with nothing to lose. Find the culprits and beat the dogshit out of them. An example to future jerks. Why not.

Anonymous said...

Let it die and watch farmers turn from R to D in a minute.

Anonymous said...

It appears at least with my limited knowledge of the futures markets that both soy beans and corn are trading at relatively high prices since this debacle started. Why can’t the judge permit the resale of these products and at least recover a substantial portion of the losses. Of course, this Is assuming the corn and beans are still there.

Anonymous said...

Which commodity broker(s) were handling this company’s transactions? Surely they were speculating in the commodity market, as that appears to have been their only chance of survival. If they had Ben lucky enough to guess he market movements, they would be wealthy.

Business education from SOHK said...

Yes, this is a bad deal for many farmers in Mississippi.
Yes, this is a bad deal for many banks in Mississippi.

But - this is a business gone broke. Sure is not the first one; certainly not in the Mississippi delta, and won't be the last one.

The owners, for whatever reason, failed in business. They spent more than they made. They borrowed more than they could pay back.

Probably, the business model they were trying to implement was flawed.

But - just as EG is a business that made some bad decisions, so are the farmers, and the bankers, that are also business people that evidently made some bad decisions (at least one, doing business with EG and 'trusting' them).

You can bet your bottom dollar, or Bitcoin, that the business transactions between the farmer and the elevator were done with known risk. There were other alternatives for the farmer (and the farmer's lending bank), but they chose to do business with the folks at EG.

Is it newsworthy? Certainly. But is it anything other than a business failure? No. Just as in every business failure, there are creditors, vendors, and others that are going to take a loss

Kingfish said...

Gamecoin, not bitcoin

Anonymous said...

Congratulations Andrew, you just bayoneted the wounded. The sale of this corpse as scrap will sink all hopes of those that stood to get something out of an operating asset.

Anonymous said...

@4:09. Don’t dare pin this on Andy. The Colemans are the problem. Andy has a job to do. If Express Grain submitted fraudulent documents, then Andy absolutely should pull their permit. You can’t allow crooks to continue operating.

Anonymous said...

To2:32’s point, Daddy said, “Son you don’t have go further than the oak tree to be a dumbass”

Anonymous said...

It seems to me there needs to be a ruling on the commissioner's argument about the validity of the permits to determine ownership of assets. If Express Grain didn't have permits, I don't how it could have legally purchased/sold crops, and how they could be collateral for the UMB loans.

A permit cannot be "revoked" if it is ruled void ab initio. You can't revoke something that never existed in the first place.

void ab initio - "An action that is void ab initio never had any legal effect."


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