LONOKE -- For a company with annual revenue in the hundreds of millions of dollars, Turner Grain Merchandising Inc. kept lousy books and was undercapitalized, a certified public accountant testified Thursday.
Cheryl Shuffield of Little Rock said she studied records of the bankrupt grain dealer during the spring of 2017, less than three years after the Brinkley company closed. She said a Turner co-founder, the late Jason Coleman, "was running a $150 million to $200 million business from the seat of his pants, basically."
Both sides in a lawsuit filed by a group of Lonoke County farmers who didn't get paid the nearly $5.5 million they were owed for their grain rested their cases Thursday. The 12-member jury in Lonoke County Circuit Court will begin deliberations on Monday after closing arguments by attorneys and jury instructions from Circuit Judge Sandy Huckabee.
The farmers are seeking an unspecified amount in compensatory and punitive damages. The trial began Jan. 31.
Shuffield, a witness called by the defense, said Turner Grain didn't have much operating capital and had net assets of less than $100,000, which she called "razor thin" for a company with such a high volume in sales.
Turner Grain filed for bankruptcy in October 2014 about two months after being closed down by federal regulators who found no grain in bins certified as being full. The company's federal bankruptcy filing listed some $14 million in assets and $47 million in debts, mostly to farmers.
Turner Grain reported sales of $223.8 million in 2012, $277.9 million in 2013, and $235.3 million in 2014 until the time of its closing and the closing of its related companies.
"Slow pay" by any major customer would place the company in jeopardy, Shuffield said, adding exactly that happened with Gavilon Inc., a major commodity buyer in Omaha, Neb.
Shuffield noted that the court-appointed bankruptcy trustee for Turner Grain had sued Gavilon, alleging that the Nebraska company was responsible for at least $14 million worth of Turner's financial woes. That lawsuit, however, has been diverted to arbitration before the National Grain and Feed Association because of stipulations in the contract between Turner and Gavilon.
The Lonoke County farmers allege that Turner Grain was an "agent" of KBX Inc., a grain dealer and exporter, and that it is KBX that owes money to the farmers. Along with KBX and three of its employees, defendants are a Turner Grain entity called Agri-Petroleum Sales; Turner's other co-founder, Dale Bartlett of Marvell, and a Turner salesman, Christopher Taylor.
KBX attorneys say the company paid Turner $5,488,101 for rice that Turner had agreed to buy from the Lonoke County plaintiffs. They also say it is Gavilon that owes Turner Grain.
Turner Grain was "check-kiting" in its final weeks, with a flurry of withdrawals and deposits between its banks in Clarendon and Helena-West Helena, Shuffield said. With checks starting to be returned for insufficient funds, those accounts were soon closed by the banks, she said.
"And then, basically, it was all over," she said.
Business on 02/21/2020