The court-appointed receiver for Agridime LLC recommended that bankruptcy proceedings would not be in the best interest of investors and creditors, according to a quarterly report filed.
The initial quarterly report filed in the U.S. District Court for the Northern District of Texas, states there are approximately 840,000 pounds of retail meat located in Agridime’s warehouses to be sold. Following the establishment of American Grazed Beef LLC, online retail meat sales resumed on Feb. 22, 2024, after a seven-week hiatus caused by credit card payment processors declining to work with Agridime due to numerous credit card chargebacks related to cattle contract purchases. Cumulatively, from Jan. 1, 2024, to March 31, 2024, gross wholesale and retail meat sales totaled $2.8 million.
There are also approximately 3,400 head of cattle at Cattle Empire LLC and Brookover Feedyards Inc. in Kansas. The feedlots have assured these cattle are anticipated to be finished by the summer of 2024.
Additionally, there are approximately 1,600 head of cattle located on Agridime property. According to court documents, the cattle are located at Morgan Creek Farms and Goracke Farms in Kansas, and Cedar Valley Farms in Illinois.
Based on these factors, Steve Fahey, the court-appointed receiver, recommended the receivership continue. Fahey said there have been ongoing efforts to sell assets, investigate damages claims against third parties, administer the investor and creditor claims and recover any fraudulent transfers.
Initial activities
According to the quarterly report, Fahey had to initially ascertain the amount of cattle and inventory the supply of fresh and frozen meat. Josh Link, co-owner and executive director, reported 17,852 head of cattle owned by Agridime in October 2023. Upon investigation by Fahey, the company owned only approximately 9,900 head, and more than 2,000 of these were under retained ownership.
“Finding the cattle and ascertaining accurate current numbers were challenging; Mr. Link’s inventory contained general location information with no specific contact information, some locations were under the control of Mr. Link or his family members and some of the specific locations in Mr. Link’s inventory were reluctant to share any cattle information with the Receivership without significant back-and-forth effort,” court documents state.
Fahey also found that Agridime claimed a meat inventory of over $83 million on Dec. 11, 2023, but after conducting a thorough inventory, the company actually had approximately $20 million in meat on hand across its warehouses in Arizona, Kansas, and Texas. The warehouses in Texas lacked proper refrigeration, forcing the company to rent freezer boxes and refrigerated trailers, costing Agridime about $140,000 monthly.
Fahey also reduced the workforce from 83 employees to 40 positions by closing several subsidiaries of the company. The companies closed included, Agridime Logistics LLC, a trucking subsidiary; Open Range Tallow, a company producing candles and skin care products using tallow; Farm Fresh Grill, a company-run food truck; Farm to Home Market, an online platform for ranchers to sell their products and Gilbert Greens, a subsidiary raising “microgreens” for sale on Agridime’s retail website.
Fahey also hired a law firm and forensic accountant to preserve and protect the assets. An inventory as of March 31, 2024, showed Agridime owned several buildings in Hope and Harrington, KS, valued over $1.1 million and a farm in Abingdon, IL.
Prospective buyer
According to the report, Fahey has engaged with several interested parties regarding the acquisition of Agridime’s assets. Fahey said he is in “serious discussions” with a North Dakota-based investor group that is interested in purchasing Agridime’s assets including the remaining meat and cattle and to continue operating the American Grazed Beef name.
The report states if Fahey is presented with a reasonable offer, he plans to seek court approval for the sale, notify all relevant stakeholders, and provide a reasonable notice period for the execution of the sale.
Fahey statedwork remains in the case, but suggested setting an initial deadline of July 31, 2024, for the submission of a liquidation plan to address the matters comprehensively. — Charles Wallace, WLJ contributing editor
