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Rotten Legal Games and Rotten Feed in Veblen Dairy Bankruptcy?

A couple of interesting court documents same across my desk this week concerning the legal aftermath of the bankruptcy sale of the Veblen mega-dairies, which we can all hope Riverview's Fehr brothers are running more cleanly and honestly than dairy destroyer Richard E. Millner ever did.

First, Veblen West Dairy bankruptcy trustee Forrest C. Allred has been trying to get the bankruptcy court to compel Millner's lawyer Bryant D. Tchida and law firm Leonard, Street and Deinard to withdraw from representing Millner's Prairie Ridge Management and Vantage Cattle Company. In a reply to objections, trustee Allred this week filed a pretty damning argument about Leonard Street's conflict of interest, having represented Veblen West during bankruptcy proceedings and now representing former owners and partners against the bankruptcy estate.

Even more interesting is Allred's outline of how Millner and his lawyers apparently misled the court during the bankruptcy proceedings last fall. Allred notes that, in objection to motions for bankruptcy sale, Millner's lawyers contended that Millner's Veblen dairies were operating on a break-even basis and paying all of their operating expenses.

f. In reality, it is now obvious Millner and the other equity owners &ndash represented by Leonard Street &ndash seriously misled this court. The Vantage application for an administrative expense of $834,689.56 is a particularly egregious example. As explained above Millner &ndash as part of the group calling itself "Certain Equity Owners of Veblen West Dairy, LLP", and represented by Leonard Street &ndash represented to this court on multiple occasions that Debtor was operating in the black since the date of filing. Now, Millner &ndash operating through Vantage and again represented by Leonard Street &ndash claims an an unpaid operating expense averaging over $100,000.00 per month since this bankruptcy case has been pending. A significant part of litigating the Vantage administrative claim is expected to involve matters and financial records that pre-date the bankruptcy filing, including times when Leonard Street was representing Debtor, or Vantage, or both, and the course of dealings between Vantage and Debtor.

g. As stated above, Leonard Street prepared Schedule B herein, signed by Millner under penalties of perjury. Substantially all of the personal property listed on schedule B has been sold, but the purchaser has discovered that significant items of personal property listed &ndash valued at well in excess of $100,000.00 &ndash either never existed or were not in fact owned by Debtor. The estate has potential claims arising out of this issue, claims relating to documents that Leonard Street preprared [Forrest C. Allred, Chapter 11 Trustee, Reply, U.S. Bankruptcy Court, In re: Veblen West Dairy LLP, Case 10-10071, Document 597, 2011.04.11].

Wow: telling the court you're paying your bills, then asking the court to squeeze your old estate for bills you didn't pay to yourself... making over $100K of property disappear... sounds like some strange magic going on in Veblen.

The second document of interest is #605, an objection to Allred's motion to compel withdrawal of counsel from Charles Baus, of Baus Oil Company in Sisseton. In a hand-written note to the court, Mr. Baus says (I transcribe verbatim):

It is felt that there is major clean up to be done on Greenman Street-Ballard Street, the city storm sewers and all plugged culverts do to tons of rotton feed that has not been cleaned up for many years. This is not the responsibility of the City of Veblen or Riverview [Charles Baus, objection, U.S. Bankruptcy Court, In re: Veblen West Dairy LLP, Case 10-10071, Document 605, 2011.04.13].

I'm not sure the court discussion of the propriety of Leonard Street representign Millner against the very dairy it represented just last year is the appropriate venue for a discussion of the environmental clean-up claims Mr. Baus makes here. But it's too bad Millner and his lawyers can't magically make their continued environmental problems go away as easily as the ephemeral personal property Allred mentions.