Deadline looms for VeraSun paybacks
Late last month, fallen ethanol giant VeraSun sent letters demanding payback from anyone who the company paid for corn delivered in the 90 days leading up to the company filing for bankruptcy in October 2008.
Those corn suppliers receiving that notification were given until September 30, next Thursday, to respond to the company's demand. So, if you're in this group, what should you do now?
"Do not ignore this matter. Seek advice of a bankruptcy expert before making any payment or offering to settle," says Steve Moline of the Iowa Attorney General's office, according to an Iowa State University (ISU) Extension report from farm management specialist Kelvin Leibold. "And gather and copy all of your VeraSun transaction documents for your attorney so a response can be formed immediately."
The bottom line lies in proof of full defense, adds Erin Herbold of the ISU Center for Agricultural Law and Taxation. "Suppliers who did nothing wrong are being asked to provide information to the trustee to establish their defenses," says Herbold. "Some will have strong defenses and the trustee may cease further inquiry; some suppliers will have partial defenses that may provide room for negotiation for a lower settlement; and some will have no defense."
What's the documentation required to make such a case? Cedar Rapids, Iowa, bankruptcy attorney Joe Peiffer says to include the following documents:
- Copies of all documents and/or correspondence received from VeraSun regarding how and when it would pay for corn purchased from corn suppliers.
- Copies of all scale tickets for corn sold to VeraSun at any time, not just the checks in question.
- Copies of all settlement sheets for all corn sold to VeraSun at any time.
- Copies of all contracts for sale of corn to VeraSun with delivery before Oct. 31, 2008.
- Copies of all deposit tickets for checks received from VeraSun at any time.
- Copies of all checks deposited from VeraSun.
"These documents need to be provided to your bankruptcy attorney immediately so the attorney can draft a response to the preference demand letter by the September 30 deadline," Peiffer says. "Failure to respond to the preference demand letter could result in the supplier being sued in bankruptcy court in Delaware."
If you have questions, you can reach Erin Herbold by phone at 515/294-6365 or by e-mail at email@example.com.