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.