November 25, 2020
Earlier this week dozens of farmers who used to ship to the former Dean Foods received an envelope with a stack of papers informing them they are required to help pay the company’s debt. In the documents provided to the producers, it appears the farmers are being required to pay back a portion of the money they received for milk sales during the “preference period” of the company’s bankruptcy proceedings.
The preference period for “non-insiders" of the debtor (anyone other than the owners, officers, or relatives of a debtor) consists of the 90-day period immediately before the filing. The amount being required to pay is relatively small, the farmer who sent us his paperwork is required to pay almost $4,000 to settle the “debt.” Still, producers say this is wrong in point and principal.
“My field rep said I was the second person to get this paperwork to her knowledge,” a farmer told Farm Journal. “Something fishy is going on.”
It appears in the paperwork the payments farmers received during this period were not authorized by the court overseeing the company’s bankruptcy. “If you believe one or more of these transfers [payments] was authorized by the court of under the Bankruptcy Code, please notify us immediately,” the settlement paperwork says.
Producers are required to pay the assigned settlement offers by December 19, 2020. If they don’t pay the settlement, they will be required to repay the full amount they received during the period. For the farm whose paperwork we have, that would total more than $14,000.
Dean Foods filed for Chapter 11 Bankruptcy in November of 2019. Dairy Farmers of America bought the majority of the company’s assets in May 2020.