Tyson Alleges Easterday Conducted A “Fire Sale”
Claiming Easterday Ranches conducted a “fire sale” of one of its feedlots just days before filing for bankruptcy, Tyson Foods asked the U.S. Bankruptcy Court in the Eastern District of Washington this week to appoint a trustee to take control of the Easterday estate.
In a separate filing, Easterday Farms, Inc., the crops-producing side of the family business, followed Easterday Ranches in filing for Chapter 11 protection, listing both assets and debts between $100 million and $500 million.
Last month Tyson sued Easterday Ranches, Inc. alleging the company defrauded Tyson of more than $225 million related to 200,000 cattle that did not exist. Easterday Ranches filed for Chapter 11 bankruptcy protection owing $238 million to more than 20 creditors. In court filings this week, Tyson alleged the funds from the fire sale of Easterday’s North Lot were diverted to the family rather than to creditors.
In its motion, Tyson alleges that Paladin Management Group, hired by Easterday, "engineered a surreptitious sale of its largest unencumbered parcel in a fire sale transaction on the eve of bankruptcy" and then distributed 80% of the proceeds, about $12 million, to benefit the Easterday family rather than to third party creditors.
Tyson also argued the sale of the North Lot – to Tyson competitor AB Livestock – yielded an inadequate price. "We will not know how much value Debtor left on the table unless and until the North Lot is the subject of a true marketing process or the transaction is reviewed by an independent party," the motion states.
The sale of the 25,000-head North Lot was completed for $16 million to AB Livestock of Boise, ID, just days before Tyson filed its civil lawsuit. AB Livestock is a division of Agri Beef Co, based in Boise. Agri Beef co-owns Washington Beef, a beef packer based in Toppenish, WA, with a daily slaughter capacity of 1,550 head. Last July, Agri Beef announced it would open a packing plant in Jerome, ID, that will process 500 head per day and operate as True West Beef.
titious inventory records to Plaintiff; and has otherwise schemed to defraud Plaintiff in a way that has caused Plaintiff losses in excess of $225 million."