Home New Cases CoBank Summoned For Return of Farmers Elevator’s “Preference Payments”

CoBank Summoned For Return of Farmers Elevator’s “Preference Payments”

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January 15, 2021, Oklahoma - Trustee Ginger D. Goddard for the bankruptcy estate of Farmers Elevator Company (the “Debtor”) filed a lawsuit against CoBank ( the “Defendant’), seeking the return of transfers worth $ 4M, under 11 U.S.C. §§ 547(b) and/or 548 and 550(a) of the Bankruptcy Code.

Under 11 U.S.C. § 547 of the U.S. bankruptcy code, payments made by a company during the final 90 days before the filing of bankruptcy are considered “preference” payments. The 90-day preference period in the Debtor's case begins from October 12, 2018, till January 10, 2019.

According to the complaint, the Debtor sold all of its assets to Farmers Co-Operative of Carmen, Oklahoma on January 2, 2019, and paid Defendant $2,500,000.00 in the sale. Subsequently, the Debtor made additional payments worth $1,500,0000 to the Defendant from its bank account, taking the aggregate recoverable amount to be $4M. The Trustee asserted that both these transactions fell within the preference period, constituted transfers of interest of Debtor’s property to or for the benefit of Defendant, and hence were recoverable.

While the Defendant argued that it had liens on all assets of the Debtor at the time of the initial transfer, the Trustee countered that there were many titled motor vehicles and trailers, and other assets of Debtor, that were transferred in the sale, for which Defendant had no lien.

The Debtor filed for bankruptcy in the United States Bankruptcy Court for the Western District of Oklahoma, on January 10, 2019, In re Farmers Elevator Company, Case No. 19-10062. Honorable Judge Christopher J. Panos is presiding over the Debtor’s case.

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