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Farmland Industries Creditors Paid in Full
Maximizing the recovery for unsecured creditors is the primary goal of every liquidating trustee. In proposing the Farmland Industries liquidating plan, the debtor estimated that the maximum recovery for unsecured creditors would not exceed 85% of their allowed claims and that it would take the liquidating trustee approximately 5 years to reach that payout. Instead, JPMorgan, the appointed liquidating trustee, paid unsecured creditors more than 100% of their allowed claims 3 years earlier than anticipated. Several factors played a crucial role in maximizing the payout for Farmland Industries' unsecured creditors; these are explained in this article.
Some History
JPMorgan was appointed as the Liquidating Trustee for Farmland Industries, Inc. and distributed full payment totaling $891 million to unsecured creditors. With these funds, unsecured creditors received 104.6% of their claims (100% of principal ' the maximum amount of interest allowed under the terms of the Plan). This payment was the sixth distribution of funds, the last of which was sent in June of this year. This result far exceeded the expectations of the creditors and professionals that were involved in the Farmland bankruptcy case when JPMorgan began its administration of the FI Liquidating Trust on May 1, 2004. It is also a rare achievement in any Chapter 11 case, let alone for a fully liquidating corporate debtor.
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