A large corn and soybean farm in the region has been approved to move forward with a Chapter 11 bankruptcy filing.
Judge Robert Jonker, of the U.S. District Court for the Western District of Michigan, on Friday granted a motion for Zeeland-based Boersen Farms AG LLC to initiate Chapter 11 proceedings.
In August, Minnesota-based CHS Capital, the farm’s largest creditor, filed a lawsuit against Boersen and 20 affiliated business entities for failure to repay loans totaling $145,327,000.
According to the plaintiff, Boersen also misrepresented the quantity of grain from its 2016 harvest and diverted proceeds to pay for personal real estate.
On Sept. 13, at the request of the plaintiff, Jonker appointed Grand Rapids-based O’Keefe & Associates Consulting LLC, or OAC, as receiver with the “duty to protect and preserve” the farm’s assets throughout the proceedings.
Varnum attorney Michael McElwee, representing OAC, on Friday filed the motion to initiate Chapter 11 relief rather than the more common Chapter 7. Under Chapter 7, the debtor’s assets are sold off to pay the creditors. In Chapter 11, the debtor negotiates with creditors to alter the terms of the loan without having to liquidate assets.
“OAC has drawn the conclusion that placing the business defendants … in Chapter 11 bankruptcy proceedings is in the best interests of creditors,” OAC Principal Patrick O’Keefe said in court documents.
This is in part because the defendants do not have the $6.3 million required to harvest the 2017 soybean crop on 56,000 acres throughout West Michigan, and CHS Capital is suing for proceeds from the harvest as restitution.
O’Keefe said CHS Capital is unwilling to provide an advance toward the harvest “unless the business defendants are under the supervision of a court-appointed receiver or are in a Chapter 11 bankruptcy proceeding, in either proceeding providing for the advances to be priority secured advances upon terms acceptable to the plaintiff.”
Jonker said once Chapter 11 has been filed, “the Bankruptcy Court will decide on additional powers” for OAC as the receiver — which could include OAC taking possession of Boersen’s assets.
Boersen Farms AG LLC et al. is represented by attorney Cody Knight, of Kalamazoo law firm Rayman & Knight.