Some Pennsylvania dairy farmers got an unpleasant surprise when they opened their mailboxes the day after Thanksgiving. There were letters demanding payment from the farmers as a part of the Dean Foods bankruptcy case.
About 100 dairy farmers received the letters sent by a law firm involved with the Dean Foods bankruptcy proceedings.
Farmers should not make any payments and should sit tight as the Pennsylvania Milk Marketing Board and Pennsylvania Attorney General’s office are working on a solution, said Doug Eberly, chief counsel for the Pennsylvania Milk Marketing Board.
The letters demand farmers repay a portion of milk check money paid by Dean before it declared bankruptcy in November 2019, Eberly said. Farmers can pay part of the money by Christmas Eve to avoid the claim being filed in court, according to the letters.
Eberly said it looks like milk haulers and dealers are getting these letters as well.
Why is this happening now? If a bankrupt entity can’t pay back its creditors in full, there’s a provision in bankruptcy law that allows it to ask for money back from people and businesses it paid in the 90 day period before it declared bankruptcy.
The legal defense against this is to prove the payments were made in the ordinary course of business. A dairy farmer selling its milk to a processor and being paid on the date provided by regulations is the definition of that, Eberly said. He’s not sure the letters should have been sent in the first place.
Eberly hopes they can get the bankruptcy firm to drop the matter. Farmers may still have to provide documentation proving that Dean paid them in the normal course of business.
“Hopefully we’ll get some kind of procedure laid out that farmers can follow to clarify that their payments were made during regular business,” he said.
The Center for Dairy Excellence is holding an industry conference call at noon Dec. 10 to discuss the Dean Food payments issue. Eberly said he hopes to have more answers for farmers by then.
Those interested can tune in by calling 978-990-5000 and entering the access code 553371 followed by the # sign when prompted.
During that call, the registration deadlines for the Coronavirus Food Assistance Program 2 and Dairy Margin Coverage will also be discussed. Questions can be submitted in advance by texting or calling 717-585-0766 or emailing zmyers@centerfordairyexcellence.org.
(Reporter Rachel Wagoner can be contacted at 800-837-3419 or rachel@farmanddairy.com.)
