Easterday Ranch Seeks Court Injunction

LINCOLN, Neb. (DTN) -- Rabo AgriFinance LLC may stand in the way of the sale of farm and ranch assets of southeastern Washington's Easterday Ranches Inc.

Easterday asked a federal bankruptcy court to issue a temporary restraining order and injunction against the creditor. Rabobank is trying to collect nearly $1.1 million owed it by Easterday, as the rancher who filed for Chapter 11 bankruptcy protection looks to sell assets.

Rabobank is the loan debtor in the ongoing bankruptcy case that has not consented to a court-approved cooperative agreement between Easterday and its creditors.

Without an injunction, Easterday's attorneys argue in a court filing on Monday, the sale and relief to creditors would be in jeopardy.

"If the debtors were to default in seeking or obtaining an injunction against the last holdout, Rabo, and the partners were to terminate the cooperation agreement before the completion of the sales, the financial consequences to the debtors and their estates would be devastating," Easterday said in its motion.

"Moreover, closing the sale in the coming weeks and confirming a successful plan process in the coming months is dependent upon the ongoing cooperation of the partners. This cooperation is threatened by the continued prosecution of the Rabo action."

A hearing on the injunction request has been set for Friday morning in the U.S. District Court for the District of Eastern Washington, as Easterday presses toward selling its farm and ranch assets to the highest bidder in a recent auction -- the Church of Jesus Christ of Latter-day Saints.

A group of six debtors and Easterday negotiated a court-approved cooperation agreement to sell the assets for the highest-possible value.

Five debtors consenting to the agreement are owed about $145 million by Easterday, according to court records. Those debtors include Washington Trust Bank, Tyson Fresh Meats Inc., Prudential Insurance Company of America, Deere and Company and CHS Capital LLC.

A preliminary injunction would prevent Rabobank from continuing its pursuit to collect from Easterday. Easterday has until Thursday to respond to the Rabobank lawsuit.

"The debtors intend to file a joint chapter 11 plan to provide for the payments of creditors' claims, including any allowed claims of Rabo," Easterday attorneys said in their motion.

"The funding of the plan will be from the proceeds received by the debtors' estates as a result of the contemplated sales process of the sale properties -- a process that has the support of the major creditor constituencies in these chapter 11 cases is a critical component of this process, and a key to the debtors' ability to confirm a plan."

A company connected to the church was the winning bidder for the assets of southeast Washington rancher Cody Easterday, according to court documents filed in federal bankruptcy court. The second-highest bidder was an investment company tied to Microsoft founder Bill Gates.

According to court documents, Farmland Reserve was awarded the winning bid of $209 million for the Easterday assets. A court hearing on the sale is scheduled for July 14.

Back in April, Mesa, Washington, rancher Easterday pleaded guilty to wire fraud for defrauding Tyson Foods and another unnamed company $244 million in costs for buying and feeding hundreds of thousands of cattle that didn't exist. Easterday, 49, faces up to 20 years in prison.

The criminal case and connected Chapter 11 bankruptcy of Easterday Ranches Inc. and Easterday Farms could lead to the liquidation of an extensive family farm operation in eastern Washington involved in cattle feeding, as well as having 22,500 acres of potatoes, onions, corn and wheat in the Columbia Basin.

Read more DTN coverage here:

"Winning Bid on Easterday Assets: $209M," https://www.dtnpf.com/…

"WA Rancher Admits 'Ghost-Cattle' Scam," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

(c) Copyright 2021 DTN, LLC. All rights reserved.