Producers concerned about being paid for grain delivered to hog companies that have since filed for bankruptcy protection are protected under legislation. Farmers will have first right to inventory if the companies do go bankrupt. (FILE PHOTO)
Farmers who delivered grain to hog producers, that have since filed for bankruptcy protection and haven’t been paid for their shipment, should be protected under the Bankruptcy and Protection Act, according to Selkirk-Interlake Conservative MP James Bezan.
The federal government has made several changes to the act in the past decade, Bezan said, and one of those changes was to ensure that farmers, who are unsecured creditors, have first right to bankrupt companies’ inventory.
"We changed (the Bankruptcy and Insolvency Act) to ensure that primary producers, whether they are farmers or commercial fishers, have the opportunity to recoup their losses and be ahead in the line over secured creditors like banks," Bezan said. "Farmers and fishers who are not paid within 15 days of any action being taken against a buyer are given right of all the inventory of that buyer, so they rank ahead of secured creditors even."
Bezan said there is some grey area right now because Puratone, Manitoba’s third-largest hog producer, and Big Sky Farms, Saskatchewan’s largest pork producer, have filed for bankruptcy protection — not bankruptcy.
He has spoken to several farmers that are owed money by the hog companies and encouraged all producers that are owed to register with the trustees handling the cases.
Several offers have been submitted for both companies since they entered bankruptcy protection, but were rejected after they were deemed to be too low. While Bezan is hopeful that an agreement to purchase the hog companies will be worked out and that the new owner will honour any outstanding contracts, he said farmers will be protected if the companies are thrust into bankruptcy.
"Farmers that are owed money will have first right to Puratone’s inventory, which includes feed stocks and hogs," Bezan said.
At the Keystone Agricultural Producers general meeting in Portage on Thursday, the issue was voiced by several producers.
"There are producers that delivered to Puratone that haven’t received payment and are still waiting to see how that situation unfolds," KAP policy analyst James Battershill said.
KAP has faced situations like this in the past, Battershill said, and did pass a resolution to ask the federal and provincial government for further systems that offer protection through a producer payment security mechanism.
Republished from the Brandon Sun print edition October 29, 2012