More than a dozen producers in North Dakota have filed claims with the Public Service Commission against a Minnesota elevator for failing to pay for sunflower deliveries going back as far as two years, and a judge recently declared the company insolvent and made the commission a trustee.
Sue Richter, licensing division director for the commission, said as of Tuesday there have been 13 claims filed against Mitchell Feeds Inc., which is based in Hendrum, Minn., and has a North Dakota office in Horace, southwest of Fargo. The first claim was filed Feb. 1 of this year by a Towner producer who stated in a letter to the commission he still has not received payment for a load of sunflower seeds delivered to Mitchell Feeds in May 2009.
Other producers from Sherwood, Mylo, Crosby and Glenburn have also sent letters to the commission with similar stories. Richter said many of the letters didn't include any specific figures about how much sunflower seed was sold or what the payment was supposed to be, so at this point it's impossible to tell who is owed what.
Dan Feldner/MDN • A field of sunflowers west of Minot is seen in this photo taken last fall. A North Dakota judge recently ruled that a Minnesota elevator is insolvent and named the North Dakota Public Service Commission trustee.
There is a $70,000 surety bond from Western Surety Co. of Sioux Falls, S.D., to help pay off the debts of Mitchell Feeds. But even though she doesn't know specific amounts, Richter knows it won't be enough.
"We really don't have a good handle on it," Richter said. "We were given some information and we really don't know how accurate it is. ... We know that it's going to be significantly higher than the $70,000 bond that's on file, but at this time we really can't (say exactly)."
Some of the amounts producers claim to be owed in their letters to the commission top $100,000 and even approach $200,000.
Richter said the Public Service Commission issued an ex parte order on April 14 that Mitchell Feeds Inc. cease and desist all grain-buying activities in North Dakota, which the company has followed as far as she knows.
A phone call placed to Mitchell Feeds seeking comment was not answered.
On April 14 the Public Service Commission filed a motion in Burleigh County District Court asking that Mitchell Feeds be declared insolvent under the North Dakota Century Code as of Feb. 1, the date the first claim was filed. The court was also asked to appoint the PSC as trustee of the trust fund, which would enable the commission to use the $70,000 surety bond to begin paying off the debts of Mitchell Feeds.
Richter said the judge in the case, Donald Jorgensen, signed an ex parte order May 5 to preserve the trust assets until the court had time to rule on the motion to declare Mitchell Feeds insolvent and name the commission as trustee.
"The order prohibits Mitchell Feeds from selling, transferring or removing any potential assets of the trust fund until they can issue their order either granting or denying our application for appointment (as trustee)," Richter said.
Going through the register of actions of Burleigh County District Court on her computer during an interview with The Minot Daily News, Richter said the judge apparently signed the order declaring Mitchell Feeds Insolvent and making the commission trustee seven days prior, on May 10. She said they probably hadn't received the paperwork yet due to some glitch in the system.
"It appears as though the judge did sign that order on May 10. ... (and) it appears as though we've been appointed trustee," Richter said.
Now that the commission has been named trustee, Richter said the next step would be to give notice of that appointment, followed by a notice for anyone who hasn't already done so to file a claim if they have delivered sunflower seed to Mitchell Feeds and have not received payment.
"And then we would look at the records of Mitchell Feeds and we would compare them to all of the claims, and then make a decision regarding the validity and the amounts of the claims," Richter said.
Richter isn't sure if Mitchell Feeds has anything else that can be used to help pay off the debts, but said the commission will be researching what, if any, other assets might be available at the present time. When all the research has been done and all the records verified, a report recommendation is put together listing who should get what.
"Our statute says that shares will be distributed equally, the trust fund proceeds will be distributed equally, and so that is exactly what we would have to do," Richter said.
The entire process is still in its infancy, so Richter couldn't say whether or not all the producers who file claims will receive payment in full for their sunflower seed. Much like the business of farming itself, all anyone can do at this point is wait and see.
"I don't think that we can answer that at this point, because we're not going to know that answer until we really get much farther along in the process," Richter said.