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VeraSun backs down from corn payback demands

Jeff Caldwell 09/30/2010 @ 7:26pm Agricultural content creator and marketer.

Thursday was the day some farmers had been dreading.

It was the day that attorneys for fallen ethanol giant VeraSun had set as the deadline for some farmers who had supplied corn to the company to pay back the payment they'd received.

But, it didn't end up happening that way.

In late August, VeraSun attorneys sent letters to farmers who had sold corn to the ethanol refiner within 90 days of its bankruptcy filing stating they were legally bound to repay any amounts they had been paid for their grain delivered. At that time, Iowa State University Center for Agricultural Law and Taxation director Roger McEowen said that request was "within their legal rights" in some situations.

Just last week, legal experts and attorneys in Iowa, like Steve Moline of the Iowa Attorney General's office, told farmers affected by the bankruptcy to "seek advice of a bankruptcy expert before making any payment or offering to settle" and prepare all the documents necessary to document any sales to VeraSun.

But, news came late Thursday afternoon of a reversal by VeraSun attorneys: The company would not be demanding the grain paybacks after all. According to a report from the National Corn Growers Association (NCGA) report, attorneys with the grower group sent a "strongly worded correspondence" to VeraSun's legal counsel.

“We believe that many of the foregoing demands were made without any legal and factual foundation and, as such, constitute an impermissible effort to collect alleged debts that are clearly not owing,” wrote attorney David Lander of Thompson Coburn, according to an NCGA report. “They appear to have been made without the inquiry reasonable under the circumstances. Moreover, we believe that the claims asserted in the vast bulk of these letters are not warranted by existing law or a non-frivolous argument for the extension, modification or reversal of existing law or the establishment of new law.”

Farmers' reaction was naturally pleased and relieved. NCGA president Darrin Ihnen called Thursday's announcement "great news at a time when we need to focus on bringing in our crops.

“We’re glad the lawyers saw the light and realized they had no legal justification to go after us," Ihnen added Thursday. "We had an excellent team working on this to make sure we had the right information, and to present our case.”

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