FARMERS caught up in the recent collapse of Barooga Agri Products are being urged to talk to each other and farmer representative organisations to form a united front in order to try and salvage the best deal possible for themselves.
However, those caught in previous insolvencies cases have said the hard reality is that growers, as unsecured creditors, are likely to receive a fraction of what they are owed, at best.
In recent years, farmers have been hard hit by grain trader insolvencies, with River City Grain / Sapphire, Convector, One World and AustAsia Milling among those to go to the wall.
Dan Cooper, a creditor of AustAsia Milling, who went on to sit on the Committee of Inspection once the company went into liquidation, said the administration process was a lengthy one.
“This case has been going on for four years, and it is still not complete.”
In the initial instance, he said farmers needed to understand the administration process and feel comfortable they knew what was going on.
“There is a lot of technical detail there in terms of the process and farmers should make sure they understand what is happening and why.”
He also said growers needed to keep an eye on the performance of the administrator and what it was doing for their needs.
“You can see really high administrator fees or the focus on satisfying the secured creditors’ needs and not much get back to the unsecured creditors, so just keep an eye on what is happening on that front.”
Another grower creditor of a failed grain trading business, who asked not to be named, said while the natural instinct was to push hard for compensation, farmers had to be careful of throwing good money after bad.
“With my experience, I’d be fairly loathe to spend too much on legal bills.”
He agreed farmers needed to do their research on the administrator selected and to try and be involved in the process perhaps ensuring there was a grower voice on the committee of inspection.
However, he said the cruel truth was, as unsecured creditors, farmers would struggle to get their money back.
“There are initiatives like the personal property security register (PPSR) and purchase money security interests (PMSIs) that people have tried to use, but in practice I haven’t heard of them having a lot of success with them.”
“Unfortunately, when a business goes under it doesn’t have the necessary funds and what assets it does have will generally go towards paying the secured creditors.”