Hansen-Mueller Sureties File Appeal

LINCOLN, Neb. (DTN) -- Two bonding companies that lost their bid to claim $7.9 million in grain proceeds in Hansen-Mueller Co.'s Chapter 11 bankruptcy have filed an appeal with a federal court in Nebraska.

The U.S. Bankruptcy Court of Nebraska ruled at the end of September that Harco National Insurance Company and International Fidelity Insurance Company had no rights to proceeds, after the companies argued the proceeds should have been used to reimburse bond payments to farmers.

The surety companies also made the case that the general indemnity agreement with Hansen-Mueller created a trust fund for those proceeds.

The bonding companies filed a notice of appeal with the U.S. District Court of Nebraska Tuesday.

Bankruptcy court decisions often are appealed to federal district courts, as bankruptcy courts were established as units of district courts.

In the filing for an appeal, the surety companies opted not to have their appeal heard by the Bankruptcy Appellate Panel. Appealing to the district court essentially preserves their right to later appeal to a federal appeals court and even the U.S. Supreme Court.

If the district court was to reverse the bankruptcy court's decision, it could affect the amount of priority claims against Hansen-Mueller's assets and could influence recoveries for other creditor groups.

The U.S. Bankruptcy Court of Nebraska also recently granted Hansen-Mueller's request for an extension of the exclusivity deadline to file a Chapter 11 plan with the court to Jan. 14, 2027.

Extending that deadline prevents creditors and other parties from filing competing bankruptcy plans. It is not yet clear, however, when Hansen-Mueller might file a Chapter 11 plan.

The bonding companies had argued that they stand in the place of farmers who have outstanding claims in the bankruptcy case.

For Hansen-Mueller's financier BMO Bank, the bankruptcy court's ruling against Harco National Insurance Company and International Fidelity Insurance Company freed up about $3.9 million BMO held in a reserve account. BMO loaned more than $50 million to the Omaha-based company.

Hansen-Mueller told the court in recent filings that it is making progress toward reorganizing its debts or liquidation. In all, the company told the court it had generated about $24.2 million from assets sales.

Read more on DTN:

"Hansen-Mueller Wins $7.9M Bond Fight," https://www.dtnpf.com/…

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

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