By Roberta Rampton, Western Producer
Winnipeg, Manitoba — Canadian creditors are waiting to find out how an American bankruptcy trustee will divide the spoils left behind by Consolidated Growers and Processors Inc.
But court documents filed in California by the now-defunct hemp company reveal there will likely be little money left for farmers and creditors.
The company claims it has more than $5.8 million (all figures U.S.) in assets.
On closer examination, however, the value of CGP’s assets appear significantly smaller.
The company is counting on receiving $5 million from an unresolved lawsuit it launched against Canadian law firm Thompson Dorfman Sweatman.
It’s up to trustee David Seror to decide whether to continue the lawsuit, settle it, or ask the bankruptcy court’s permission to abandon it, said Jay Welford, a bankruptcy lawyer with Jaffe, Raitt, Heuer and Weiss in Detroit, Michigan.
“His biggest challenge will be if he has money (from CGP) available to continue that lawsuit,” said Welford.
CGP is also counting on the trustee to pry $700,000 from Canadian farmers for planting seed for the 1999 crop.
Anders Bruun, who teaches agricultural law at the University of Manitoba, said the bills for seed will likely be set off from farmers’ claims, meaning farmers won’t have to pay for the seed up front.
“They would not be well-advised to pay it,” Bruun said.
Welford said the trustee can also ask the court for authority to abandon the accounts.
But Welford said the trustee will likely send a letter to the farmers listed demanding payment.
“He hopes that if you shake that tree, you’ll get a few bucks,” said Welford.
The third-largest asset CGP lists in its bankruptcy petition is unprocessed hemp seed and fibre from the 1998 crop, which CGP valued at close to $114,000.
The seed is in storage in Portage la Prairie, Man., but has been tied up by the courts after CGP’s most recent Canadian law firm, Pitblado Buchwald Asper, sued the company for unpaid legal bills.
Welford said U.S. bankruptcy law allows for seized assets to be returned to the trustee, depending on the situation.
Other assets include a phone system CGP valued at $4,500, and $240 in U.S. and European bank accounts.
CGP said it had $3,500 in its Canadian bank account, but Revenue Canada froze the account over unpaid goods and services taxes in January.
CGP mentions the 1999 hemp crop as an asset in its filings, but notes it owes farmers $5 million for it.
Copyright © 2000, The Western Producer.