FCC, BMO are secured creditors Lenders oppose having money set aside in case farmers win lawsuit
Farm Credit Canada and the Bank of Montreal are appealing a court decision that would help Manitoba farmers recover losses from unpaid grain deliveries.
This spring, a judge responsible for dispersing money from Puratone, a Manitoba hog company that entered creditor protection last fall, decided that affected farmers should have a chance to recoup their losses.
Instead of distributing all of Puratone’s cash assets to secured creditors, primarily FCC and BMO, the judge set aside $903,250.50 until a group of farmers, who sold feed grain to Puratone last August and September, proceed with litigation against the company’s directors and officers.
John Sigurdson, a farmer from Riverton, Man., who sold more than $60,000 in feed grain to Puratone, said BMO and FCC claim the judge erred in his decision.
“Their appeal is to go to court Sept. 19,” he said.
Puratone entered creditor protection last September. The company owed creditors nearly $100 million, including $86 million to secured creditors: BMO, FCC and the Manitoba Agricultural Services Corp.
Late last summer a number of farmers delivered grain to Puratone’s feed mills in Winkler, Niverville and Arborg. They never received payment and in certain cases producers lost as much as $300,000.
Seventeen farmers joined forces last winter in attempts to recoup their losses.
James Bezan, member of Parliament for Selkirk-Interlake, the region where some of the farmers in the group live, said it’s reasonable for FCC to file an appeal in this case because it is financially prudent.
“FCC also has a responsibility to the taxpayers of Canada…. They have to proceed with collecting outstanding debts and they can’t set a precedent of not doing it in this situation.”
Nonetheless, Bezan said he stands with the farmers.
“I, 100 percent stand with the producers on this one. I believe that the lenders, the way they circumvented the Bankruptcy and Insolvency Act, in my opinion was unconscionable,” he said in a voice message.
“These producers should be allowed to file this motion… to collect the monies owed to them, as was guaranteed by Parliament under the Bankruptcy and Insolvency Act.”
A FCC spokesperson confirmed that it has filed an appeal. The spokesperson added the legal documents in this case explain why it is appealing the judge’s decision to set aside money for the farmers.
BMO was not immediately available for comment.