Information for Organic Farmers Who Sold Grain to Pipeline Foods

On July 8, 2021, organic and non-GMO grain buyer Pipeline Foods filed for Chapter 11 bankruptcy. Earlier this year, the company’s bankruptcy proceeding was finalized by a court in Delaware.

Unfortunately, for some organic farmers who sold to Pipeline, this situation is still not behind them. This summer, some farmers have received “clawback” letters from a law firm in Minnesota serving as the trustee for Pipeline Foods’ liquidation.

IF YOU HAVE RECEIVED ONE OF THESE LETTERS, DO NOT IGNORE IT.  Unfortunately, this seems to be a legitimate part of the bankruptcy process.

The letters claim that farms that were paid by Pipeline Foods during the 90 days leading up to the bankruptcy filing (on July 8, 2021) now must return a portion of that payment to the bankruptcy proceeding.

Here are some things you can do if you have received one of these letters:

  1. Gather information about your history with Pipeline Foods – how many times did you sell grain to the company, on what dates, when did they make payment, etc. This could be important in establishing that the payment you got during the 90-day period before the bankruptcy was similar to your previous transactions with the company.  If you have contracts with Pipeline, gather those as well.
  2. Contact an attorney. If you already have an attorney you use for farm business, start with them. Ask if they have experience with bankruptcy proceedings. If not, ask them to refer you to someone who does.
  3. When you show the letter from the bankruptcy trustee to your attorney, ask them to look into two possible arguments to make in response:
  • Your payment should be exempt from a preference claim because it was made in the “ordinary course of business.”
  • Your payment should be exempt from a preference claim because it was a contemporaneous transaction made for “new value.” (This would apply to payments made for grain delivered within 90 days before the bankruptcy date.)
              These exemptions are spelled out under 11 USC 547(c).
  1. Ask for an extension. The letter from the trustee gives a very tight deadline to reply with a payment. The first step your attorney may want to take is to ask for more time to formulate your response explaining why your payment is not subject to clawback by the trustee.
  2. Let OFA know if you have received one of these letters. We will try to keep people updated and share resources about ways to respond. You can email Kate Mendenhall, OFA Executive Director, kate@organicfarmersassociation.org or fill out a short survey about your situation.  Knowing how many farmers have been affected will help us strategize on the best way to help you as a whole.

Join today and support organic farmers!

Organic Farmers Association members support a strong voice for organic farmers in Washington, D.C.


The Organic Farmers Association is the ONLY national organization where solely independent certified organic farms determine its policies and work agenda. OFA was founded on the belief that the voice of farmers like you should carry the most weight in agricultural policy decisions.

In recent years, OFA has made a difference by putting significant pressure on the USDA to finalize the Origin of Livestock Rule to help organic dairies and finalize the Strengthening Organic Enforcement Rule to stop organic fraud and increase enforcement. We testified and advocated to allow paper pots for small-scale vegetable growers, introduced the ODAIRY Act of 2023, and advocated for stronger animal welfare standards for organic livestock and poultry production (OLPS Rule).

We have proved that farmer voices are stronger when we work together. Join us in this movement by becoming a member today! 

Farm
Membership

U.S. certified organic farmers should select this membership. Only farm members are eligible to vote on Organic Farmers Association policy positions and priorities. International farmers, or farms that are not certified organic, should select the Supporter Membership.

Join now

Supporter Membership

Not a certified organic farmer, but want to support the organic farmers that make our planet and food systems a better place? Supporter members will be connected to the discussions about policies that affect organic farmers, and be called to advocate on their behalf.

Join now

Organization Membership

Organizations that have a significant membership (or stakeholders) of certified organic farmers should select this membership. Organization Members receive the tools they need to advocate for policies important to organic farmers and extend their network.

Join now

PO Box 709
Spirit Lake, IA 51360
202-643-5363
info@OrganicFarmersAssociation.org

About the Organic Farmers Association

In 2016 farmers from across the country came together to launch the Organic Farmers Association (OFA) to unite organic farmers for a better future together. In 2020, OFA gained its 501c5 nonprofit status.  Rodale Institute supports this initiative as fiscal sponsor and partner with OFA’s farmer leadership.

Community

Facebook

LinkedIn

Donate

Farmer HelpLine: (833) 724-3834