The trustee in the Turner Grain Merchandising bankruptcy case has asked a federal judge to order Helena National Bank to turn over more than $314,000 in disputed funds.
The money is in a checking account belonging to the defunct grain dealer and is subject to a competing claim in a separate state court lawsuit brought by two Arkansas County farms, according to the trustee. Because of that state suit, Helena National Bank has refused to release the money to him, the trustee says.
But the trustee, Richard Cox, said the farms -- LTD Farms Partnership and Hargrove Farms Inc. -- are both creditors in the Turner bankruptcy case and so aren't entitled to make a separate claim against Turner's remaining assets.
"They have no higher claim to the account funds than any other of [Turner's] creditors," according to a brief filed Friday in support of Cox's request for a summary judgment.
Turner Grain Merchandising Inc. of Brinkley filed for bankruptcy in October 2014, listing liabilities of $24.8 million and assets of $13.8 million. The failure cost farmers who did business with the grain dealer tens of millions of dollars, and a flurry of lawsuits were filed against Turner in state and federal court seeking payment for grain delivered to the company.
Most of those lawsuits are now part of the bankruptcy case, which was converted to a Chapter 7 liquidation in May. However, U.S. Bankruptcy Judge Phyllis Jones on Sept. 4 returned a lawsuit by Zero Grade Farms and others against Turner to Lonoke County Circuit Court. Attorneys for Southern Rice and Cotton LLC of Harrisburg on Oct. 19 asked that its case be sent back to Circuit Court in Poinsett County.
In their Arkansas County Circuit Court lawsuit against Turner, its owners, and the Helena bank, LTD and Hargrove assert that Turner agreed to buy their grain and eventually turned over two checks worth $67,780 each. After delivering those checks, however, the lawsuit said Turner on two occasions improperly directed Helena National Bank to freeze the checking account. On the first occasion, the bank relied on a power of attorney that did not apply to Turner, the lawsuit said, and on the second it complied with a request from Dale Bartlett about a month after he had been removed as an officer of Turner.
Because Helena National Bank incorrectly froze the account at Turner's request, LTD and Hargrove said, they are entitled to payment with interest.
In his request for summary judgment, Cox said Helena National Bank has admitted that the $314,766 remaining in the checking account belongs to Turner's bankruptcy estate. As creditors in the bankruptcy case, LTD and Hargrove are subject to decisions made by the judge and the trustee, Cox said.
"The account funds must be marshaled into [Turner's] estate and distributed fairly by the trustee and the court," Cox said.
The "unfortunate fact" is that numerous other creditors "make nearly identical claims" about how they delivered grain to Turner but were never paid, Cox said.
Business on 11/03/2015