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Bankruptcy鈥攁nd Questions鈥擯lague Northern Colorado鈥檚 Grant Farms

Grace Hood

Colorado鈥檚 ongoing drought is just one of the reasons that the country鈥檚 largest Community Supported Agriculture farm (CSA) near Fort Collins filed for bankruptcy.

Grant Family Farms must now dissolve its operations in order to pay back millions of dollars in loans. More than 200 creditors across the country have been left in the lurch by the popular organic farm.

Grant Family Farms sent out notice of the bankruptcy in late December to CSA members, citing ineligibility for crop insurance along with hail damage and a government-mandated spinach recall.

鈥淣o fault of ours, it was a farm in California, but the federal government stopped spinach sales,鈥� said owner Andy Grant after a recent meeting of creditors. 鈥淭his has been an uncomfortable year.鈥�

During a nearly two-hour meeting Tuesday, creditors got a better picture of Grant Family Farms鈥� finances鈥攁 structure that can only be described as byzantine. In addition to the organic CSA and raising thousands chickens, the farm sold vegetables commercially. But operations grew complicated in 2012. That鈥檚 when Grant Farms relinquished some control to the group of investors Localization Partners LLC in order to secure to a $1.5 million loan. That arrangement left creditors like Suzanne Rieder of Mountain Spirit Organic scratching her head.

鈥淵ou may pay slow, but you always pay,鈥� she said after the meeting. 鈥淲e suddenly know that there鈥檚 no income coming in, there鈥檚 no response and they have no control. And I couldn鈥檛 find any answers.鈥�

Now Rieder is out an estimated $60,000. Her chief complaint was lack of financial transparency in the months leading up to the bankruptcy.

More Drought = More Bankruptcies?

Colorado State University Professor of Agriculture Resource Economics Norm Dalsted says lack of available crop insurance for vegetable farmers, the competitive organic market and other factors contributed to the demise of Grant Farms. But the most important component is something the farm had less control over.

鈥淎 lot of people have been concerned about fuel prices and cost of fertilizer,鈥� he says. 鈥淏ut the key resource that鈥檚 limiting to any farm operation is water. We have to have water.鈥�

Much of Colorado right now is experiencing extreme to exceptional drought conditions鈥攚ith southeastern Colorado seeing the worst of it. Crop insurance helped many farmers across the state recoup some losses. Dalsted warns 2013 could lead to even more bankruptcies if rain doesn鈥檛 come soon.

鈥淎griculture is a very important sector in Colorado鈥檚 overall economy. That directly ties to retail trade, wholesale trade, labor impacts,鈥� he says. 鈥淥bviously it has a fairly significant impact in the economic environment of any localized community, particularly in Fort Collins.鈥�

Bankruptcy 鈥攑articularly chapter 7鈥攆or a large scale operation like Grant Farms leaves behind a complicated web that will be difficult for trustees to untangle, especially when multiple business partners were in charge of the farms different operations.

A Long Line of Creditors

At Tuesday鈥檚 creditors meeting there were other complicated questions. Curtis Bridges is one of about 8 renting land to Grant Family Farms. Bridges didn鈥檛 lose any money with the bankruptcy. But he wanted his land untangled from the proceedings so he can find another renter. That鈥檚 because Grant Farms stopped paying workman鈥檚 compensation insurance in 2012, which was one of the conditions of the lease.

鈥淲hat I need the court to decide is what I can do with my land for 2013. Farmers this time of the year have to buy seed, fertilizer, exc., he said. 鈥淪o we need to have some kind of decision, do we have a lease, or don鈥檛 we?鈥�

A trustee appointed to oversee the Chapter 7 bankruptcy will be making decisions on this and other matters in the coming weeks.

Right now the immediate need for farmer and owner Andy Grant is to sell his assets so lenders can recoup their losses. But in the long line of creditors there will be winners and losers. So called 鈥渟ecured creditors鈥� will be the first to be paid because they established collateral for their loans. Those who didn鈥檛 could have a longer and possibly more disappointing wait ahead.

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