Swine Co. Continues Fight v Financier

LINCOLN, Neb. (DTN) -- A Canadian swine company at the center of an alleged check-kiting scheme continues to blame its financier for the fall of three U.S. swine companies, asking a U.S. district court this week to continue to hear its claims despite agreeing to sell the facilities now under receivership.

Alberta-based Sunterra Group this week asked the U.S. District Court for the District of South Dakota to not grant financier Compeer Financial's motion to dismiss the company's counterclaims made in an April 11 filing.

Part of the allegations raised in the counterclaim are that financier Compeer essentially pushed the companies in Iowa and South Dakota into receivership without giving them a chance to restructure financing.

Sunterra faces more than $36 million in losses in its operation of Sunwold Farms Inc., Sunterra Farms Iowa Inc. and Lariagra Farms South Inc. In recent days, Sunterra received a $15 million offer to buy the facilities from Arkansas-based the Pork Group.

On Tuesday, Sunterra opposed the motion to dismiss and told the court that Compeer could be trying to hide something.

"Plaintiff suggests that it is somehow more virtuous because it verified its complaint, as compared to defendants' counterclaims," Sunterra said in a court document.

"First, as noted above, this court must accept those factual allegations as true. Second, and more importantly, plaintiff never specifically denies those allegations. As discovery will reveal, the references to specific dates, promises and representations are, almost all, taken from emails exchanged between plaintiff and defendants. Plaintiff is not an actual bank. It is not subject to the same regulatory requirements and environment as a typical bank, either. Defendants suspect that plaintiff's true motivations in bringing the motion to dismiss have less to do with the merits of this case but more to do with plaintiff's concerns that these counterclaims will expose its wrongful conduct."

In the counterclaims levied by Sunterra, the company alleges that Compeer knew how Sunterra was using its accounts.

"The activity that Compeer claims was so alarming that it had to freeze its borrowers' funds was something that Compeer knew about and even helped facilitate," Sunterra told the court in April.

"Counterclaim plaintiffs, in reliance on Compeer's representations, continued business as usual, entered into agreements with third parties and continued supplying substantial business to other farmers and suppliers ... in southeast South Dakota and beyond."

Compeer alleged Between Jan. 1, 2025, and Feb. 10, 2025, alone, the swine operators issued 474 checks out of their Compeer accounts for a total of about $431.3 million. During the same time, they deposited 472 checks into their Compeer accounts for a total of $432.4 million.

Compeer told the court the "simultaneous transfers" occurred nearly daily throughout that period and averaged out to about 18 checks for a total of $16.6 million coming out of the Compeer accounts each day.

On Feb. 11, 2025, Compeer Financial required checks written by the farm to be manually approved so check-writing activity could be monitored.

That same day, the complaint said, Compeer was notified that 18 checks had been drawn on the Compeer accounts for intercompany transfers to Canadian Western Bank, totaling about $16.3 million. Compeer dishonored all 18 checks.

On the morning of Feb. 12, 2025, Compeer received another batch of about $9 million in checks drawn on the Canadian Western Bank account for deposit into the defendants' Compeer account, according to the lawsuit.

Read more on DTN:

"Swine Farms in Check-Kiting Seek Sale," https://www.dtnpf.com/…

"Swine Firms Blame Banker in Check-Kiting," https://www.dtnpf.com/…

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

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