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Dean Foods Pays Farmers for April Milk

June 8, 2020

Anna-Lisa Laca

Dean Foods on Monday began the process of paying farmers for their April milk. About a week ago we shared the story of Gary Rassmusen a dairy producer from Michigan who was caught up in the web of the Dean Foods bankruptcy. 

Rassmusen is one of dozens of farmers who ship their milk directly to Dean Foods and had not been paid for their April milk. Rassmusen received payment for his milk this morning and said he was told the remainder of Dean Foods direct shippers will be paid by the end of the week. 

On May 1, Dean Foods sold the majority of its assets to Dairy Farmers of America (DFA) and Prairie Farms Dairy. Additionally, assets were sold individually to other dairy companies. The sale of assets to DFA and others did not satisfy the Debtor-in-Possession (DIP) loan that kept Dean Foods operating through its bankruptcy proceeding until the time of sale. Dean Foods was waiting for outstanding receivables and tax refunds to pay the remainder of their April bills. 

“Dean Foods anticipates that the plan will provide for the full payment of all administrative expense claims in the coming months (following the repayment of its senior secured superpriority post-petition financing facility),” wrote Gary Rahlfs, chief financial officer at Dean Foods, in an undated letter to farmers who didn’t receive payment. “Given Dean Foods’ lack of operating revenues, the timing of payment of such expenses are dependent on the timing of further inflows of liquidity from the collection of outstanding receivables, the monetization of Dean Foods’ remaining assets, and the receipt of certain tax refunds due to Dean Foods, all of which are expected to occur over the coming months.”

It’s unclear at this time if Dean Foods has settled with other entities it owes money too, including DFA.


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