WASHINGTON (DTN) -- It appears Boersen Farms, the Zeeland, Michigan, operation in the middle of court actions for defaulting on $145.3 million in loans, may live to farm another day.
According to a brief filed in the U.S. District Court for the District of Western Michigan on Monday, a new lender, LT Capital LLC, has agreed to take on the debt, and statements by that lender say they will ask for a dismissal of this court action against the farm.
Boersen Farms, which operated more than 80,000 corn and soybean acres in western Michigan, still faces lawsuits in other states.
"On Oct. 4, 2017, Plaintiff CHS Capital LLC assigned and transferred its interests in the outstanding loans and security interests securing the outstanding loans involved in this matter to LT Capital LLC who agreed to assume the obligations of CHS Capital LLC from and after the date of assignment," the court brief said.
"As part of the assignment, CHS Capital LLC and LT Capital LLC agreed that LT Capital LLC would substitute in for CHS Capital LLC in this action. Upon substitution, LT Capital LLC intends to pursue immediate voluntary dismissal of this action."
According to the Michigan Secretary of State's office, an LT Capital LLC based in Zeeland filed for articles of incorporation with the Michigan Department of Licensing and Regulatory Affairs on Sept. 29, 2017. The filing documents list Brian Terborg as the resident agent of the LLC. A person of that same name is listed as CFO of Zeeland Farm Services Inc., a family-owned agriculture services business based in Zeeland.
Boersen Farms bought the bulk of Decatur, Michigan-based Stamp Farms LLC's land-lease agreements and other assets in what was considered one of the largest farm bankruptcies ever in 2013.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
CHS Capital had asked the court for a receivership. That would have placed all property used as collateral for the loans under the control of an independent person known as a receiver. According to court records, Boersen Farms agreed with the motion, only to change its mind.
The CHS lawsuit leveled a number of allegations against Boersen Farms.
First, CHS alleged the farm "fraudulently and intentionally misrepresented to CHS Capital the quantity of harvested 20l6 grain available for sale, which quantity and resulting expected sale proceeds were included in the budget.
"To induce CHS Capital to forbear from exercising its legal right to take possession of the 2016 harvested crops, defendants fraudulently and intentionally misrepresented the volume of harvested 2016 grain by over $6 million to create the illusion of sufficient revenue to offset expenses. Further, the defendants failed to comply with the budget."
The lawsuit said because of "misrepresentations" about the quantity and quality of the 2016 crop in storage, Boersen Farms "have insufficient remaining 2016 crop and crop proceeds to pay the expenses to harvest the 2017 crop. The defendants will run out of cash in late August, and will have no money to pay for the expenses of harvesting the soybeans in September."
CHS said in the lawsuit it would be willing to provide funds for harvest to a receivership, but not to Boersen Farms itself.
In addition, CHS alleged the farm sold grain to third parties without notifying the lender.
Some of the larger transactions included the sale of about 495,000 bushels of corn to BF Funding LLC, "a newly created entity formed to thwart CHS Capital's Food Security Act notices. Proceeds from these grain sales of approximately $1.9 million were not delivered to CHS Capital, in violation of the security agreements," the lawsuit said.
"Similarly, the borrowers delivered 594,604 bushels of corn to Poet LLC, an Indiana purchaser outside the normal geographic scope of the borrower's historical sales of grain." That sale, according to the lawsuit, generated about $2.2 million in proceeds.
According to a news report that aired on Wood TV 8 in Grand Rapids, Michigan, Boersen Farms faces a number of other smaller lawsuits totaling about $3 million.
The farm has been sued by equipment companies and others, and the lawsuit alleges Boersen farms used more than $200,000 in CHS' cash collateral to buy a $614,000 house.
Boersen Farms also faces related lawsuits in Utah and Kansas.
In U.S. District Court for the District of Utah, equipment company TFG-Michigan filed a lawsuit claiming it has not been paid for more than 120 center pivots leased by Boersen Farms. Boersen Farms was found in contempt of court in that case. In U.S. District Court for the District of Kansas, Boersen Farms was sued for breach of contract related to its pursuit of finding someone to acquire the CHS debt.
Todd Neeley can be reached at email@example.com
Follow him on Twitter @toddneeleyDTN
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.