Tyson Foods Inc. of Springdale filed suit against one of its beef suppliers in January, alleging that the vendor schemed the company out of $225 million by falsifying its cattle inventory.
Tyson Foods asked for a temporary restraining order against Easterday Ranches Inc. of Pasco, Washington, led by President Cody Easterday. The company also requested the appointment of a receiver to handle the ranch's assets and operations.
That request appears moot now that Easterday Ranches filed for Chapter 11 bankruptcy on Monday, and listed more than $225 million in debt to Tyson Foods. The filing also submitted two restructuring officers, pending approval.
Easterday Ranches sold a 1,500-acre feedlot for $16 million to AB Livestock LLC of Boise, Idaho, on Jan. 22, just three days before Tyson Foods filed its lawsuit in the Superior Court of the State of Washington for Franklin County. The lawsuit was filed through Tyson Foods' subsidiary Tyson Fresh Meats of Dakota Dunes, South Dakota.
In the suit, Tyson Foods alleged that Easterday Ranches, which fed and housed cattle for the company on its feedlots, had submitted false invoices for reimbursements of expenses for more than 284,000 cattle. An inventory check by Tyson Foods in November and December revealed that the ranch had just 54,000 heads of cattle.
The lawsuit said that Cody Easterday admitted in meetings with Tyson Foods that he had committed fraud to cover $200 million in losses from investments in the commodities markets.
Tyson Foods said it had reported its inventory at 284,000 cattle worth $321 million with Easterday in October at the end of the fiscal year. Tyson Foods had previously said Easterday Ranches was responsible for 2% of the company's live cattle supply in the beef segment from 2017 to 2020.
Tyson Foods had filed a statement with the U.S. Securities & Exchange Commission in December that the "misrepresentations" had caused it to overreport its beef inventory by $285 million. The company said an investigation by outside advisors did not find it benefitted from the supplier's actions nor did any company employee do anything to hide the supplier's actions.