The Easter bankruptcy divides millions into dozens. What some expect to be paid
After more than one year of negotiationsEasterday’s bankruptcy settlement is nearing completion for dozens of companies that owed money.
In a recent hearing, attorneys and Yakima Federal Bankruptcy Court Judge Whitman Holt discussed the latest proposal for a claims schedule for 65 companies with claims ranging from $300 million to $4 million.
All in all claims amount to $10.76 million and represent the bulk of the debts for the Easterday Farms portion of the lawsuit.
The Easterday Ranches portion is still ongoing and includes more than $260 million in claims from Tyson Foods and Properties of Segale.
So far Rabo Agrifinance is the only recalcitrant, in his attempt to obtain more than a million dollars in mortgages.
Lawyers for many other firms reported that their clients had voted on and approved the tentative settlement amounts, most with more than 90% approval by the voting parties.
Judge Holt said that although Rabo could “throw a grenade” at the colony, that’s probably not the best course of action. Instead, language was added in a recent filing that will allow Rabo to preserve its claim while the other companies settle down.
The Easterday Companies had defaulted on loans made by Rabo for several of their properties in Franklin County.
The Basin City property has now been sold as part of the liquidation process, and Karen Easterday will retain ownership of the Pasco Onion Shed.
Judge Holt said he was pleasantly surprised at the speed of the proceedings, noting that he has seen cases of a similar size take years to settle.
“A common trope is that a bankruptcy case is like a giant iceberg and the judge only sees what is above water. Assuming that’s true, I’ve seen quite a bit of the tip of the iceberg, and I can only imagine what you’ve been dealing with throughout the underwater case,” a- he declared. “If this case is cleared by the end of the year or early next year, it will be well ahead of many cases that have been filed (recently).”
He also praised the companies and their legal advisers for their willingness to work together to find a solution.
In addition to the Rabo claim, Tyson still has an eligible claim of $261 million and Segale has one for $7.8 million.
“Ghost cattle” scam
Tyson’s claim stems from a “ghost cattlea scheme perpetuated by Easterday President Cody Easterday, in which he tasked the company with looking after more than 200,000 head of cattle that did not exist.
Cody Easterday pleaded guilty to wire fraud charges and will be sentenced in September, or once the bankruptcy case is settled. His sentence has been moved several times to allow him to cooperate in the trial. He faces up to 20 years in prison.
Segale’s request stems from a loan to purchase thousands of head of cattle.
The settlement also means that other members of Easterday’s family would not be prosecuted for failing to act to stop Cody Easterday’s ‘ghost cattle’ scam if they were aware of it.
Easterday’s mother, Karen Easterday, represented the family in legal proceedings after the death of her husband, Gale Easterday. He was killed in a December 2020 head-on crash while driving the wrong way on Interstate 182 in Pasco.
The agreement would also see debtors agree not to file documents, submit statements or appear in court in connection with Cody Easterday’s sentencing, pending approval of the stipulation by the Justice Department.
Tyson and Segale are not required to waive their direct claims against Cody Easterday, but all other family members will be released from liability subject to performance on their part of the agreement, which includes the sale of certain personal property and payment towards settlement to keep other property rather than selling it.
Sale of equipment, real estate and other assets generated approximately $250 million into debt, according to court documents.
Most of that money comes from the sale of 18,000 acres of land to AgriNorthwest, part of the investment arm of The Church of Jesus Christ of Latter-day Saints.
A total of 65 plaintiffs have approved the tentative settlement totaling nearly $10.76 million.
Settlements range from as little as $310 owed to Newhouse Manufacturing to $4 million owed to The McGregor Company.
Some of the more notable or local claims include:
John Deere Financial – $2.3 million
DLL Funding – $1.35 million
Central Machinery Sales – $740,000
Workforce Solutions Plus – $455,000
Cornado Garza Trucking – $187,000
Lad Irrigation Company – $61,000
Pasco Bobcat – $59,500
Basin City Auto Parts – $24,000
PUD Benton – $23,000
Connell Oil Inc. – $2,700
Over a four-year period, Easterday tasked Tyson with tending to non-existent livestock on his Franklin County operation.
According to his plea agreement, of the nearly 300,000 cattle claimed in an inventory report, about 266,000 did not actually exist.
For example, an invoice submitted to Tyson showed that Easterday purchased 1,568 new head of cattle, requesting payment of approximately $1.5 million. Another claimed 6,312 head of nonexistent cattle, for which Easterday’s company received $5.3 million from Tyson.
Easterday also received around $11 million from the second company, now identified as Segale, for the purchase and maintenance of thousands of non-existent cattle.
Easterday Ranches was supposed to have repaid those funds with 4% interest.
Prosecutors said Easterday embarked on the scheme to cover losses from a decade of speculative trading in cattle futures markets using both its own money and that of the company.