Chapter 12/Farm Cases

A Nebraska farmer says that growers need protection from bankruptcy clawback cases, Brownfield Ag News reported. Kevin Fulton, whose diversified organic farm is based in Sherman County, said he sold his entire 2020 soybean crop to Pipeline Foods LLC, only to receive a clawback letter a year later. It “said we had 30 days to pay it back, and it was a substantial amount, $140,000, but I didn’t get my soybeans back. I just had to pay them back the money,”  Fulton said. “I contacted some attorneys, and was basically told that law is legitimate, and they have the right to do that.” Pipeline Foods filed for bankruptcy in July 2021, and current law allows a trustee to recover assets or their value from a debtor who may have made unfair transfers within 90 days before the filing. Fulton said that the lengthy legal process had an impact on his operation. “They said if we went to court that I would most likely lose, so I would have to pay back probably the whole amount plus a lot more in attorney fees. So, it probably would have cost me several hundred thousand dollars,” Fulton said. “We negotiated it down and I ended up paying them $50,000, which is still a pretty big hit.” He says his story can happen to anyone. “It doesn’t just affect organic farmers; it could be anybody that sells grain. And it’s not just grain,” he added. Fulton says he wants to bring more awareness to the issue, and hopes lawmakers incorporate farmer clawback protections in any new farm bill. Numerous farmers this month received similar clawback letters in the bankruptcy proceedings of Iowa-based Global Processing Inc.