The other half of a Central Washington agriculture operation has filed for Chapter 11 bankruptcy a week after Easterday Ranches sought creditor protection amid a meatpacker’s allegations the company defrauded it of $225 million in the purchase and feeding of 200,000 missing cattle.
The Easterday family, based in Mesa, Arizona, on Feb. 1 filed bankruptcy papers for Easterday Ranches, listing debts of more than $236 million to its top 20 creditors.
On Monday, Easterday Farms, which is the crops-producing side of the family business, filed its own petition. It listed both assets and debts between $100 million and $500 million. Both Easterday Ranches and Easterday Farms have corporate offices with Pasco addresses.
According to court records made public Tuesday, Easterday Farms has and continues to sell feed to the ranch side of the business that has been caught up in an alleged scandal of missing cattle owned by Wallula-based Tyson Fresh Meats, a subsidiary of Tyson Foods.
In the bankruptcy filing, T. Scott Avilla, the co-chief restructuring agent hired by the Easterdays, wrote that the Easterday family operates a vast agriculture operation that includes farming of corn, onions and potatoes on about 22,500 acres in and around the Columbia River basin.
Avilla wrote that a day before Easterday Ranches filed for bankruptcy, Easterday Farms’ partners Cody, Debby and Karen L. Easterday transferred control of both Ranches and Farms to a board of directors “comprised solely of Craig A. Barbarosh, R. Todd Neilson, and Thomas Saunders.”
That means the board will make business decisions, including paying about 130 full-time and 90 part-time employees, and complying with purchase contracts with other companies that do business with Easterday Farms.
The newest filing provides no explanation as to how the alleged fraud involving the cattle occurred.
Court records say that Easterday Farms sold Easterday Ranches feed at market prices.
Officials at the state Department of Agriculture have previously said they could find no discrepancies with cattle inspection records related to Easterday Ranches.
However, since the Easterday feedlot was one of only 11 certified in the state, the only time cattle would have been subject to a physical inspection would have been when they arrived at the feedlot.
After that, Cody Easterday was in charge of filing paperwork necessary to comply with a contract with Tyson Fresh Meats. Under that contract, Easterday would purchase cattle and pay to feed them. Tyson would then reimburse Easterday for the costs of purchase and feed when the cattle were shipped to slaughter.
As for how the alleged fraud took place, Avilla wrote that Cody Easterday “purportedly engaged in fraudulent ‘forward billing’ practices, resulting in Tyson’s overpayment of over $200 million for the purchase and feeding of ‘non-existent’ or ‘missing’ cattle due to the submission of fraudulent invoices and records pursuant to the Cattle Feeding Agreement.”
Also Monday, U.S. Bankruptcy Judge Whitman Holt issued an order, requested by Easterday attorney Thomas Buford, to administer both bankruptcies of Easterday Farms and Easterday Ranches as the same case.
The bankruptcies come about five months after Spokane-based Washington Trust Bank approved a $45 million line of credit for the operation.
Washington Trust also helped secure a $1.7 million Payroll Protection Program loan from the U.S. Small Business Administration for Easterday Farms and $876,000 from the pandemic-relief program for Easterday Ranches, both dated April 2020.
That means the farming operations obtained about $2.6 million in PPP loans in the months before Tyson’s allegations of yearslong fraud came to light regarding the missing herd for which Easterday Farms was purportedly being paid to provide feed.
Asked for comment, the office of Easterday attorney Buford responded with the following statement: “The debtors will be responding to the Trustee Motion at the appropriate time and do not believe the appointment of a Trustee is in the best interests of the estates.”
Tyson attorney Alan D. Smith forwarded questions about the case to Tyson corporate offices, which did not immediately respond Tuesday.