$5.6M Awarded in Turner Grain Arbitration

The Brinkley headquarters of Turner Grain Merchandising Inc. and its related companies.

(A clarification has been made to this article. See below.)

There’s some good news to report for creditors in the bankruptcy case of Turner Grain Merchandising Inc. of Brinkley.

Last month, arbitrators at the National Grain & Feed Association awarded the bankruptcy estate of Turner Grain $5.6 million against Gavilon Grain LLC of Omaha, Nebraska.

M. Randy Rice, Turner Grain’s Chapter 7 trustee, wanted to recover millions of dollars from Gavilon under three main claims: unpaid shipments of corn, unpaid shipping charges and improper cancellation of contracts.

Rice first hauled Gavilon to bankruptcy court to try to collect the money way back in October 2016. But the bankruptcy judge put the case on hold and ordered it to NGFA arbitration in 2017, where Rice filed his claim.

Turner Grain operated as a grain broker with Gavilon as its largest trading partner, according to the arbitration decision filed March 20. In August 2014, Turner Grain closed after it was discovered that farmers weren’t being paid for crops they sold to Turner Grain. The company filed for bankruptcy protection and listed $13.7 million in assets. Its claims showed $39.7 million in debts, millions of which are owed to farmers who sold crops to Turner Grain.

According to the arbitration decision, Rice said Gavilon stopped doing business with Turner Grain in late August 2014, two weeks before it was forced into involuntary receivership in September 2014.

“Rice claims the severe financial distress, which Turner Grain faced, was caused by its extensive and ongoing trading relationship with Gavilon,” the filing said.

The arbitrators, though, disagreed.

“Turner Grain’s dire financial situation and eventual bankruptcy was due to poor accounting and contract management, shoddy recordkeeping and lack of financial reporting and controls,” the arbitration decision said. “To place the blame upon Gavilon for Turner Grain’s poor financial condition is without merit.”

And Gavilon denied each of Rice’s claims and said he provided no proof to support them, the arbitration decision said.

The arbitrators found that Rice’s claims for unpaid shipping charges were unsupported and denied them.

But they found that Rice is owed a total of $5.6 million for unpaid corn shipments and improper cancellation of contracts.

Rice declined to comment. Gavilon said in a statement to Whispers last week that “we strongly disagree with the decision from the Turner Grain arbitration and we are appealing the decision.”

Turner Grain’s bankruptcy case remains open.

(Clarification: The article should have included the fact that the arbitrators said Turner Grain’s claim for unpaid corn shipments was not supported by evidence presented in the case.)