19 Texas Farmers Denied Grain Claims

LINCOLN, Neb. (DTN) -- A federal bankruptcy court ruled against a group of 19 Texas farmers in their bid to recover more than $700,000 in grain claims submitted to Hansen-Mueller Co., ruling the farmers' claims made under Texas law were invalid in the ongoing Chapter 11 bankruptcy case.

The farmers argued in the U.S. Bankruptcy Court of Nebraska that they held perfected liens on grain they had not been paid for by the company.

On Monday, the court ruled against the farmers on nearly every argument raised, finding the claims should have been filed in Nebraska.

"The first question to be answered is whether the Texas producers hold perfected liens in the grain or grain proceeds in the hands of the debtor," the court said its order. "They do not."

The farmers argued the liens were perfected for 90 days from the date they last delivered grain to Hansen-Mueller, making the liens superior to all competing liens including Hansen-Mueller's bank, BMO Bank.

However, the court said the law requires a legal form to be filed within 90 days of delivery in Nebraska, where Hansen-Mueller was located -- not in Texas.

David R. Langston, a Lubbock, Texas-based attorney representing the Texas producers, told DTN the farmers are exploring their next steps, which could include filing an appeal.

The court found nine of the Texas farmers did not file financing statements, leaving the liens wholly unperfected. Ten of the producers filed financing statements in Texas, including three farmers who filed after the 90-day deadline.

"While the producers vigorously argue the statute grants them an automatic 90 days of perfection, they have not submitted any authority for this interpretation, nor has the court found any on its own," the court said in its order.

"Conforming the statute to that interpretation is a legislative responsibility, not a jurisprudential duty."

Four Texas producers in the group had filed notices of perfection under federal law in the case in arguing BMO Bank inappropriately converted proceeds from their sold grain and applied it to Hansen-Mueller's debt.

The court ruled there was no conversion of the proceeds.

"Because the Texas producers did not perfect their liens by timely filing financing statements in the appropriate jurisdiction, and because the notice they filed pursuant to (federal law) did not serve as an alternative form of perfection, there was no 'conversion' when Hansen-Mueller sold the grain and its lenders applied the proceeds against Hansen-Mueller's outstanding debt," the court said in its order.

The court left open one possibility for the Texas producers to fully recover the proceeds from their grain sales through reclamation, which is a procedure to potentially recover the grain delivered to Hansen-Mueller.

Federal law requires written reclamation demands to be made within 10 days of a debtor's receipt of grain, but the court said the Texas producers did not meet such a requirement.

Federal law allows sellers to remove the 10-day reclamation requirement if the sellers can show the buyer made a written misrepresentation of solvency within three months before the grain was delivered.

Even if reclamation was successful in this case, the court said the Texas producers' claims would still be behind those of secured creditors.

"Whether this is the type of evidence that constitutes a misrepresentation of solvency is debatable, but I will not foreclose the Texas producers from developing this issue further," the court said.

In the same order, the court made essentially the same ruling on claims made by a group of four Mississippi farmers.

Additionally, Hansen-Mueller settled with four North Dakota farmers on their claims. In all, the court rejected 62 out of the 89 total claims considered in the order.

The Nebraska-based grain company filed for Chapter 11 in November 2025 after farmers in several states reported they had not been paid for grain deliveries.

Read more on DTN:

"Texas Farmers Fight for Grain Claims," https://www.dtnpf.com/….

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

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