Replies to post #2482 on AgFeed Industries Inc. (fka FEEDQ)

[finbar99]

>>I agree - if the creditors are due $95M, and the bid for US assets $79M, the creditors are already motivated to make sure the bid is increased - so was unsure why we need to file something today.

I've not gone back to verify the claim, but the reason for filing something today is that the deadline to object to the bidding procedures filed by the debtor on the first day of the case expires today, according to the attys on the call. If noone objects, then those bidding procedures are set in stone. One of the more glaring parts of the procedures is the relatively short marketing runway - short by usual bankruptcy customs. One thing that is not uncommon in bk - and I'm not saying it's happening here, but that it happens - is that mgmt sees it's on a ship that is sinking despite having some nice assets. Mgmt, dealing primarily for it's own best interests, will arrange for a friend to buy those assets. To make it all legit, it has to go through the 363 sale process, where in theory anyone who is interested can show up. But one way to tilt the playing field is to give the friend (who presumably will return the favor by hiring said mgmt after auction) first crack at doing their due diligence, then file and schedule an auction so quickly that noone else hardly has time to do their own dd, line up financing and qualify to be part of the auction. That is largely what they were getting at at objecting to the timeline before the end of the day. Now, it may be that mgmt has already thoroughly marketed the assets and more time wouldn't make any difference at all - that is a reply that they can make to the objection, and the court would require them to make a showing of that fact. The unsecured creditor committee may or may not be inclined the same way - they may feel that they are close enough to full recovery given the existence of other assets they they don't need to worry about it as much as equity maybe should worry about it.

[wall_street61]

Define VIE and I don't have a clue who Madaniels is or what he said.

There is a VERY real possibility that the now present insiders of the debtor will try to conduct just this one auction and reorganize around the Oklahoma assets and Chinese assets, or also sell the Oklahoma assets and keep the Chinese assets in more or less a shell company all-the-whilst paying themselves large salaries and burning up what little value may be left for shareholders.

Don't think for a minute that it can't happen and it very well may.

For those of you that may have taken away from the conference call that getting 'a seat at the table' means you will have real leverage ---- you are mistaken. It's more of an oversight position if anything.....which means you may get a first hand look at watching any value slip away and you can't do a damn thing about it when the debtors fall back on the 'business judgment rule'.

The best outcome when you sell the business that brings in the cash is to go into liquidation mode asap, which means conversion of the case into a liquidating trust with a trustee at the helm. Theoretically they have to answer directly to beneficiaries of the trust, and if there is equity, that means you. The main advantage is it limits the cash burn. Once that sale goes through, you are looking at a melting ice cube.