Court Keeps Hansen-Mueller Case Moving

LINCOLN, Neb. (DTN) -- A federal judge cleared the way for the Hansen-Mueller Co. Chapter 11 bankruptcy case to continue after denying a bid by two bonding companies to freeze the distribution of grain proceeds and other funds from the company's estate pending an appeal in Nebraska.

Bankruptcy Court of Nebraska Judge Thomas L. Saladino said in an order on Monday that Harco National Insurance Company and International Fidelity Insurance Company failed to make a strong case that they were likely to prevail on the appeal they've filed with the U.S. District Court for the District of Nebraska.

"Movant has not even attempted to make a showing (much less, a 'strong showing') of its probability of success on appeal," Saladino said in his order.

In addition, he said in his order that preventing the flow of funds could dramatically slow down the grain company's efforts to wind down its affairs and harm other creditors in the case.

The bonding companies have claimed $7.9 million in proceeds belong to them for bonding Hansen-Mueller.

Saladino said the sureties failed to explain which funds should be frozen, which fund distributions should be considered "normal" administrative expenses, and how the bankruptcy estate could continue operating if the request was granted.

"Such an order would wreak havoc on the bankruptcy estate and the ability of the debtor to wind up its affairs in an orderly fashion," Saladino said in the order.

The bankruptcy court's previous ruling against the bonding companies freed up $3.9 million that Hansen-Mueller financier BMO Bank held in a reserve account. BMO Bank loaned the company more than $50 million.

Saladino said this week the $3.9 million in funds is not held by Hansen-Mueller and have already been distributed to BMO Bank. The court also previously ruled on all existing grain claims, as well.

"None of those orders have been appealed, so they are now final and there is no reason to require BMO to continue segregating those funds," Saladino said in the order.

A final hearing is scheduled for Oct. 20, 2026, at which the court could authorize cash distributions from Hansen-Mueller.

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 were 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.

Read more on DTN:

"Hansen-Mueller Cash Freeze Sought," https://www.dtnpf.com/…

"Hansen-Mueller Sureties File Appeal," https://www.dtnpf.com/…

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

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