Over four dozen Prairie grain growers who supplied a Minneapolis firm specializing in organic and non-GMO grains will get paid in full, the Canadian Grain Commission says.
The CGC on Tuesday announced the results of its review of producer claims in the wake of last July’s bankruptcy filing by Pipeline Foods, whose footprint in Canada included two small southern Saskatchewan grain elevators and a Winnipeg office.
The commission’s review found 49 eligible claims for unpaid deliveries, for which the CGC said Tuesday it will pay out compensation of over $2.2 million from the security posted by Pipeline’s Canadian subsidiary.
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Pipeline filed for bankruptcy in Delaware last July 8 and suspended its purchases of grain from Canadian growers effective July 9. It sought another petition July 12 to extend creditor protection to cover its subsidiaries, including the Canadian business.
The company said in a release in July that it decided a Chapter 11 bankruptcy reorganization “provides the best means to support its operations and to continue the process of selling the company in order to preserve company value and jobs.”
Pipeline said it “regret(s) the hardship this may present to our creditors, including farmers, producers and vendors and we hope we can work through issues together, in due time, with the least amount of disruption.”
Pipeline had bought its two Saskatchewan elevators in 2017: the former Mainline Terminal facility at Wapella, about 130 km south of Yorkton, and the Gull Lake Grain Corp. site at Gull Lake, about 50 km southwest of Swift Current. The elevators have capacity to handle 3,500 and 4,000 tonnes of grain respectively.
The company had just got rolling earlier in 2017 with backing from players including New York agribusiness investment firm Amerra Capital Management. The new company had planned to store, screen and blend organic and non-GMO grains including barley, corn, rye, flax, lentils, oats, peas, soybeans and wheat at the two elevators.
Pipeline, which had also set up a South American regional office in Buenos Aires, said in 2017 it was “pursuing opportunities” to invest $300 million to $500 million over the next three to five years “to build a better, more sustainable supply chain in agriculture.”
As a condition of licensing, CGC-licensed grain companies in Canada must tender security for outstanding grain liabilities to producers, in the form of a bond, letter of credit, letter of guarantee or payables insurance.
If a CGC-licensed company doesn’t meet its payment obligations, the commission then uses that posted security to compensate eligible producers. — Glacier FarmMedia Network
