Farmland Can Strip Executives' Benefits, Judge Says
KANSAS CITY, Mo. - Bankrupt Farmland Industries Inc. can strip away millions of dollars worth of benefits for former executives, but cannot touch life insurance for 2,200 retired workers, a judge has ruled. The Kansas City-based refiner, which was weighing whether to challenge U.S. Bankruptcy Judge Jerry Venters' ruling, sought to eliminate the benefits as part of its effort to reorganize under bankruptcy court protection.
However, Venters ruled that retiree insurance policies are protected while the company is in bankruptcy, although Farmland could cancel the insurance policies and other retiree benefits after a reorganization plan is approved.
Farmland officials said the ruling means the company, which filed for Chapter 11 bankruptcy protection last May, would recover $9.7 million instead of the $16.5 million it had sought. Farmland retiree Robert Martin, who worked 40 years at Farmland's oil refinery in Coffeyville, Kan., told the Associated Press the decision to strip executive perks while sparing former front-line employees is "just."
"I spent the bulk of my working life there, and that insurance was part of the retirement package, part of the inheritance," Martin said. "When the time comes, that is the money for my wife to bury me with. As far as those other guys, they probably had golden parachutes that were probably in excess of what they need."
The judge granted Farmland's request, filed in January, to stop payment on about $2 million due to former CEOs Harry Cleberg and Bob Honse and two other former Farmland executives. The money was part of the separation packages they were to receive when leaving the company.
In its most recent securities filing, Farmland listed assets of $1.4 billion and liabilities of $1.4 billion for its operations included in the bankruptcy. Farmland's beef business is not included in the bankruptcy. With the sale of its fertilizer business and other assets, Farmland says it has paid down its bank debt from $430 million last May to less than $30 million.
However, Venters ruled that retiree insurance policies are protected while the company is in bankruptcy, although Farmland could cancel the insurance policies and other retiree benefits after a reorganization plan is approved.
Farmland officials said the ruling means the company, which filed for Chapter 11 bankruptcy protection last May, would recover $9.7 million instead of the $16.5 million it had sought. Farmland retiree Robert Martin, who worked 40 years at Farmland's oil refinery in Coffeyville, Kan., told the Associated Press the decision to strip executive perks while sparing former front-line employees is "just."
"I spent the bulk of my working life there, and that insurance was part of the retirement package, part of the inheritance," Martin said. "When the time comes, that is the money for my wife to bury me with. As far as those other guys, they probably had golden parachutes that were probably in excess of what they need."
The judge granted Farmland's request, filed in January, to stop payment on about $2 million due to former CEOs Harry Cleberg and Bob Honse and two other former Farmland executives. The money was part of the separation packages they were to receive when leaving the company.
In its most recent securities filing, Farmland listed assets of $1.4 billion and liabilities of $1.4 billion for its operations included in the bankruptcy. Farmland's beef business is not included in the bankruptcy. With the sale of its fertilizer business and other assets, Farmland says it has paid down its bank debt from $430 million last May to less than $30 million.