OMAHA, Neb.—A Cass County judge has ruled that regulators shouldn’t have denied one farmer’s claim on the assets of a failed grain elevator.
The bankruptcy of Alvo Grain and Feed last spring left area farmers with millions of dollars in losses, and most received only partial payments for their losses after the grain elevator assets were liquidated.
Last year the Nebraska Public Service Commission ruled Billy Schuelke shouldn’t be paid, because the elevator records suggested Schuelke had already sold his soybeans.
Cass County District Judge Randall Rehmeier ruled Thursday that the commission knew the grain elevator’s manager had been altering daily records that were supposed to show how much grain the elevator held. Rehmeier said the commission misjudged the evidence regarding Schuelke’s 15,000-plus bushels of soybeans.
All the payments to farmers in this bankruptcy have been on hold while the court reviewed Schuelke’s appeal and appeals filed by American Exchange Bank and farmer James Mayfield. Schuelke was the only one to prevail in court.
Schuelke’s attorney Vic Covalt said this ruling is worth about $180,000 to Schuelke, but if the state appeals, any payment will likely be delayed further. Appeals in either of the two other court cases could also delay payments.
John Fecht, who oversees the commission’s Grain Warehouse Division, said he hasn’t had a chance to thoroughly review the rulings, so he wasn’t sure whether he’ll appeal.
Covalt said the commission should have acted sooner in the Alvo case because regulators had found several past instances of record-keeping problems at Gordon Ganz’ business.
“If they’d really regulated this, they would have shut down this elevator probably two years earlier,” Covalt said.
But Fecht defended how the case was handled, and said he doesn’t expect to make any significant changes in the way his staff enforces grain elevator regulations.
“I wouldn’t see that there was anything we did wrong,” Fecht said.
He has said none of the previous problems regulators found at Ganz’ operation before the bankruptcy were significant ones.
The commission’s July order for distributing payments to farmers treated farmers differently if they were paying to store grain, or if they had sold their grain through the elevator.
Nearly $900,000 was to be distributed to farmers who could prove they had grain stored at the elevators in eastern Nebraska. Some claims were denied.
Farmers who sold their grain through the elevator but weren’t paid will only receive 12.4 cents for every dollar of losses they claimed, because only $300,000 was available to cover the $2.4 million in approved claims. Another $1 million in similar claims were denied.
State officials had planned to send more than $1 million in excess funds from the sale of the grain to the bankruptcy court for distribution to Alvo Grain’s other creditors.
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