Lender sues farm for $145M
A lender for agriculture businesses is suing a farm in the region for alleged default on more than $145 million in loans.
Minnesota-based CHS Capital filed a lawsuit on Aug. 23 in the U.S. District Court for the Western District of Michigan against Zeeland-based Boersen Farms AG LLC, and 19 other affiliated partnerships and individual family members, for allegedly failing to repay loans totaling $145,327,000.
Boersen Farms is a fourth-generation, family-owned business growing corn and soybeans in at least 24 Michigan counties.
In the suit, filed by Mika Meyers attorney Ross Leisman on behalf of CHS Capital, the plaintiff said the parties came to an agreement of forbearance regarding the loans in December and again in May but the terms of the agreement were not met.
On Aug. 14, CHS sent Boersen Farms a notice of default, termination and exercise of rights.
The lender is suing Boersen Farms for the balance, all court costs and to take possession of all harvested crops in Boersen Farms’ storage facilities in Battle Creek and Plainwell — 56,415 bushels of corn worth $211,000. CHS Capital also wants to take possession of the farms’ corn and soybean crops planted just before and after the alleged default — 25,000 acres of corn and 58,000 acres of soybeans worth $49,700,000.
The suit alleges that Boersen Farms misrepresented the quantity of grain available for sale in 2016.
“The defendants fraudulently and intentionally misrepresented the volume of harvested 2016 grain by over $6 million to create the illusion of sufficient revenue to offset expenses,” Leisman wrote in the suit.
At the time of filing, Leisman said Boersen Farms would run out of cash in late August and would not have the funds to pay for the cost of harvesting the 2017 crop.
“CHS Capital is not willing to advance funds to the defendants to pay for the harvest of the 2017 crops,” Leisman wrote. “CHS Capital is willing to advance funds to a receiver for such purpose, because CHS Capital will be assured that the monies advanced will be properly used.”
As of Aug. 30, the court had not yet set a hearing on the plaintiff’s motion to set up a receivership.
CHS also alleges that contrary to the parties’ initial security agreement, Boersen Farms diverted proceeds from grain sales totaling around $5 million to several different entities to avoid paying CHS Capital.
According to CHS, the Boersen family also diverted grain sale proceeds to buy personal real estate, including a house and a wakeboard boat.
Boersen Farms’ attorney, Cody Knight of Kalamazoo law firm Rayman & Knight, has said that the defendants are cooperating with CHS to restructure the debt in order to keep the farm going.