Dairy farmers have been getting letters say they owe money as part of the Dean Foods bankruptcy case.
The Pennsylvania Milk Marketing Board has clear advice for farmers: Don’t pay those claims.
“These farmers that are getting these letters don’t owe anything to anybody and should absolutely not pay anything to anybody right now,” said Doug Eberly, the board’s counsel.
The letters — seven-page sheaves of numbers and dense legal writing — were sent by a law firm apparently connected to the bankruptcy proceeding for the major dairy processor.
The documents demand repayment of some of the milk check money paid by Dean in the months leading up to its bankruptcy proceeding last year.
Farmers are told they can close the claim and avoid a court fight by paying part of the money by Christmas Eve, said Eberly, who has received copies of some of the letters.
Under bankruptcy law, people who were paid in the 90 days before an entity files a bankruptcy petition are liable to having that money clawed back to pay the entity’s creditors.
But that money can be defended from reclamation if the payments were made in the ordinary course of doing business. This means that farmers, unless they had some unusual situation with Dean Foods, owe no money.
“Dairy farmers selling milk to a dairy processor and being paid for that milk on the date that’s provided for in the federal and state regulations is the paradigm of the ordinary course of business,” Eberly said.
In consultation with the state attorney general’s office, Eberly has been preparing correspondence to the law firm that sent the letters. Ideally, the state will get the law firm to back down, but Eberly hopes to clarify, at the very least, how the firm came up with the reduced amounts the farmers supposedly owe. The math doesn’t come with much explanation, he said.
While farmers should not pay the claims, Eberly said, they may want to gather documents to prove that Dean paid them in the normal course of business.
To defend against the claim, the law firm asks for payment records from the 15 months before Nov. 12, 2019, the date that Dean filed its bankruptcy case.
Eberly suggests farmers print out bank records showing the Dean payments from that period. The payments will show that the farm was paid at regular intervals each month.
Farmers may be able to limit their printed results to their Dean payments, or they can black out the transactions not connected to the company. Depending how Pennsylvania’s interactions go with the law firm, farms may need to submit this paperwork to the firm, Eberly said.
Dairy farmers can learn more about the Dean Foods situation at noon Dec. 10 in a call hosted by the Center for Dairy Excellence. To participate, call 978-990-5000 and enter access code 553371, followed by the # sign.