Companies face challenges making ends meet for a variety of reasons. For some, it may be malfeasance or insufficient ability on the part of those running the company. For others, it may be a changing marketplace that the company's way of doing business is no longer enough for, such as has been the case with some brick-and-mortar stores since online shopping became ubiquitous. When challenges arise, for whatever reasons, companies need to decide what to do.
Some, like Turner Grain Merchandising, wind up needing to take multiple steps. The company went into receivership last September. Last Oct. 23, they filed for Chapter 11 bankruptcy. At that time, they listed $13.8 million in assets and $24.8 million in debts. Since Nov. 3, 27 claims against the company -- totaling $47.5 million -- have been filed. Now the trustee for the company has requested that its current bankruptcy case be converted from reorganization to liquidation under Chapter 7.
Turner Grain was known in the industry as a "jobber". The jobber designation refers to a company that actually contracts with farmers to take possession of their grain and then deliver it to the buyer. Farmers have sued the company for millions of dollars they say are owed for crops.
One of the founders of Turner Grain testified that he sold his share of the company for only $5,000 in February 2014, months before those lawsuits started. That testimony was made in his personal bankruptcy case. In that case, he listed $2 million is assets and 45.5 million in debts.
The Turner Grain Chapter 7 case shows how liquidation can come into play when Chapter 11 reorganization looks no longer viable. Companies may want to consider this when they experience financial challenges.
Source: Arkansas Business, "Turner Grain Trustee Asks for Chapter 7 Liquidation" Arkansas Business Staff, Mar. 02, 2015
No Comments
Leave a comment