LINCOLN, Neb. (DTN) -- A Michigan farm at the center of a federal investigation was allowed by a federal court on Wednesday to sell a tract of land that is subject to a restraining order.
Zeeland, Michigan-based Boersen Farms Inc. has been prevented from selling property by equipment company TFG-Michigan. In 2017, the company filed a lawsuit against Boersen Farms, claiming the company had not been paid for more than 120 center pivots leased by the farm.
U.S. Magistrate Judge Ray Kent ordered the temporary lifting of the restraining order in the U.S. District Court for the District of Western Michigan. Boersen will be allowed to sell a 51-acre tract of land.
Boersen Farms will not be able to receive any proceeds from the sale, according to the judge's order, and the restraining order will remain in effect "indefinitely."
Boersen Farms told the court it owes a mortgage payment to Indiana-based Farmland Capital Solutions, LLC. The mortgage payment is due on Jan. 1, 2022, according to court documents. Boersen Farms said it was able to find a buyer for the property at a price of $916,920. Boersen Farms owes more than $15 million on the mortgage.
TFG-Michigan originally filed its lawsuit in Utah and Boersen Farms was found in contempt of court in that case.
The IRS executed a federal search warrant at Boersen Farms on June 9, 2021, in connection with an investigation of the troubled farm. The IRS typically executes search warrants in connection to alleged financial crimes that can include tax evasion. Charges have not been filed.
Boersen Farms has for years faced a number of lawsuits from companies that provided products and services to the farm that once operated about 83,000 acres. Those lawsuits were filed in an attempt to force Boersen Farms to pay money owed to the companies.
This year Boersen Farms has been attempting to sell off assets to pay creditors.
In March 2021, the court temporarily lifted a restraining order against Boersen Farms that forbids the sale of farm assets. Boersen Farms recently was forced to sell three tracts of land in an attempt to pay off creditors.
Boersen Farms was sued in 2017 by CHS Capital Inc. for defaulting on a $145.3 million loan.
Boersen Farms bought the bulk of assets from now-defunct Stamp Farms LLC. Stamp Farms' owner Michael Stamp has been sentenced to time in prison in connection with charges related to his farm's bankruptcy. Stamp Farms, based in Decatur, Michigan, filed for Chapter 11 bankruptcy protection in November 2012.
Boersen Farms ran into financial difficulty when the price of corn dropped from $6 and $7 when it purchased the Stamp assets to less than $4 per bushel.
According to the CHS lawsuit, Boersen Farms received a notice of default and termination of the $145.3 million loan on Aug. 14, 2017.
The CHS lawsuit leveled a number of allegations against Boersen Farms, including that it "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."
In October 2017, LT Capital LLC agreed to take on the CHS debt and asked for a dismissal of the CHS court action against the farm.
Todd Neeley can be reached at email@example.com.
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