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Epoch Star Secures Loan for Bankrupt Owner Northern Beef Packers?

Last updated on 2014.10.14

The items I've posted about the Northern Beef Packers bankruptcy and the doomed slaughterhouse's crazy financing—EB-5 investor money, corporate welfare from Mike Rounds, secret emergency investors, offshore transfers—represent just a fraction of the documents, tips, and questions I've received from various interested parties.

Out of that pile of both informed and wild speculation, one bit of dot-connecting leaps out and stops me cold this morning... and makes me wonder if Judge Charles Nail needs to stop the December 5 NBP bankruptcy auction.

Back in July, San Francisco-based investment firm White Oak Global Advisors filed a cash collateral motion in the NBP bankruptcy case. NBP says it owes White Oak $51 million for even emergency credit extended just last year. White Oak acts as the agent for Epoch Star Limited, the lenders who saved NBP with a $30 million loan in 2010. According the debtor-in-possession agreement NBP filed that month, Epoch Star Limited would act as guarantor of the immediate loan NBP needed to arrange its bankruptcy auction.

But hold on: as we learned this month, Northern Beef Packers bought Epoch Star Limited in 2010. Epoch Star's secret investors promised a $30-million loan, provided just $3 million, then let NBP buy them out for $35 million. $32 million thus went out the door to the British Virgin Islands.

Epoch Star may just be a piece of paper, but that piece of paper is in court saying it has the assets to guarantee a bankruptcy loan. Northern Beef Packers owns Epoch Star. Northern Beef Packers thus owns those assets. But Northern Beef Packers's declaration of assets says Epoch Star is inactive and its shares are worth nothing. NBP says it has no assets other than $60 million in land and buildings and $19 million in equipment, plus some loose change in the office couch cushions.

How can an inactive, valueless entity guarantee a loan for a bankrupt company that owns it?

If NBP's declaration of assets is true, White Oak offered bogus security for the bankruptcy loan. If Epoch Star really could guarantee the loan, then its owner, Northern Beek Packers, is sitting on a whole tub of assets that it hasn't declared to the bankruptcy judge.

Whichever is true, Judge Nail should suspend the auction and demand that Northern Beef Packers and White Oak Global explain the status of Epoch Star Limited.


  1. Chris 2013.11.25

    I really need to start a little company and have it back my loans.

    A wholly owned company backing a loan to the parent company... seriously.

  2. Amy 2013.11.25

    Thank you!!! I have been wondering the same thing!!

  3. Rorschach 2013.11.25

    It may take someone with some specialized finance/banking knowledge to sort this out.

  4. wal 2013.11.25

    who, how and what

    who may make a request to at the very least postpone the auction?

    how and what is that process?

    Can the lawyers who represented groups 6 and 9 make this request?

    Or can it only be the trustee which was court appointed?

  5. caheidelberger Post author | 2013.11.25

    No kidding, R! I'm neither a banker nor a lawyer. Maybe these kind of deals happens all the time in bankruptcy. But let's get some expertise in here to study this question!

  6. Joe 2013.11.25

    The question that needs to be asked is WHO HAS THE MONEY?

    Any idea what % of construction cost are still outstanding? I keep hearing that many of the construction companies have not been paid?

    If there was $100+ million given between loans, grants and capital and many of the bills were never paid the money has to be somewhere, right?

    You should try to contact the lawyer for someone who is owed a bunch of money to see if they have or know more about this information.

    Your doing a good job

  7. WR Old Guy 2013.11.25

    I think it's time to call in BDO. They should be able to get to the bottom of it if their ads on TV are accurate. (satire).

  8. Loren 2013.11.25

    This is exactly why I was NOT a business major! This makes my head hurt!

  9. Jerry 2013.11.25

    Good news, we can buy the plant back now and have some walking around money. Yep, ole Denny has gotten 70 million in extra money that is burning a hole in his pocket. We could buy the plant that we already own or we could expand Medicaid and have bucks left over big time. What will it be? You can damn well bet it won't be spent on the working poor or the poor that is for sure.

  10. Deb Geelsdottir 2013.11.25

    If that $70 mil is for Medicaid expansion, spending it on anything else is illegal. Of course, the Rounds/Daugard administration doesn't seem too concerned about legalities, so maybe we're just supposed to forget that, or not notice.

  11. Jerry 2013.11.25

    No, it is not for Medicaid expansion, it is a gift from some benevolent benefactors. He could use if for whatever his widdle heart desires including buying this business back up and utilizing it in a much smaller way, in other words, make the thing work without all the grandiose ideas and without the Chinese and Koreans and all that missing moolah. What's the worse that could happen?

  12. Roger Cornelius 2013.11.25

    When people ask where the money went, we now know it went to layers and layers of corporations owned by the same venture, include if you will the lawyers, financial advisers, and other paper pushers and each player likely shuffling it off to a safe off shore bank account.

    These layers of corporate transaction not only need to audited, they need a full forensic audit independent of the state.

  13. Deb Geelsdottir 2013.11.25

    Wait, some unknown entities gave the governor of SD $70 mil to use for the state with no other restrictions? No follow up, no auditing, no public record keeping? That is so messed up! Corruption upon corruption stacked upon more corruption.

    $70 million here,
    $550,000 there.
    We don't hold money dear,
    we act like we don't care.

    I know, I'm not in the Blindman's league. That's just my puny, weak effort.

  14. rollin potter 2013.11.25

    where did the money go???? Maybe a lawyer from aberdeen by the name of SVEEN and a judge by the name of Nail could help out with that answere!!!!!!

  15. Deb Geelsdottir 2013.11.25

    I have no idea who you're talking about Mr. Potter. Can you please offer this ignorant one more enlightenment? Gracias.

  16. lora 2013.11.25

    Im kind of wondering if Kenneth Gosch (Lawyer whose legal team helped with the entity structuring of Northern Beef) and the Speaker of the house Brian Gosch (Rep who co-sponsored entity structuring bills to the House floor) are related.

  17. Deb Geelsdottir 2013.11.25

    Ohhh. Excellent question Lora! I'm eager for follow up.

  18. Curtis Price 2013.11.26

    That couldn't be. We all know how much respect Rep. Gosch has for the law.

  19. barry freed 2013.11.26

    The Medicaid Expansion requires ZERO dollars from the States for 3 years. At that time, South Dakota could drop out with no penalty, having improved the health of 50,000 of the people.

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