Easterday Farms follows cattle operation into bankruptcy. Millions owed to hundreds

The farming side of a Franklin County family’s decades-old agriculture operation has filed for Chapter 11 bankruptcy, one week after its cattle ranch sought similar protection.

Easterday Farms shows debts of nearly $18 million to its top 20 creditors, including a chemical and fertilizer distributor, a labor contractor and an accounting firm, all of the Tri-Cities.

But the bankruptcy paperwork, filed Feb. 8 in U.S. District Court, says there are hundreds of creditors. The full list spans 66 pages.

Aside from the top 20, the amount owed to each of the creditors is not given. The list covers financial institutions, attorneys, wireless providers, road and farm vehicle dealers and local, state and federal agencies.

The petition estimates both assets and liabilities between $100 million and $500 million.

The new filing by the Easterday family of Mesa follows the Chapter 11 bankruptcy for Easterday Ranches, with its dairy operation and feeder cattle.

That petition on Feb. 1 listed debts of just under $237 million to its top 20 creditors.

Chapter 11 is for a reorganization of the company so the family can remain in business, rather than a liquidation under Chapter 7 when assets are sold off to pay creditors.

Tyson lawsuit

In January, a lawsuit was filed accusing Easterday Ranches of bilking Tyson Foods out of more than $225 million by charging for the purchase and feeding of 200,000 cattle that never existed.

The suit claims the money was used “to offset over $200 million in losses” incurred by then-company president Cody Easterday in the commodities trading markets.

Tyson is based in South Dakota. Its beef division operates 12 facilities around the country, including a meat processing plant in Wallula.

The company is looking to get its money back — along with 54,000 head of cattle on an Easterday feedlot north of Pasco — through the civil action taken in Franklin County Superior Court.

Tyson had listed the loss on its December filing with the federal Securities and Exchange Commission, but did not name the responsible cattle supplier until filing the lawsuit.

The ranch is part of the larger Easterday farming operations, which includes about 22,500 acres of potatoes, onions, corn and wheat. They use their own grain products to feed the cattle.

The bankruptcy filing states that Easterday Farms has property that needs immediate attention, including perishable goods like produce that otherwise could “quickly deteriorate or lose value.”

The farm’s corporate office is in the north end of Pasco just west of Highway 395, but it operates blocks throughout Adams, Benton and Franklin counties. The company also has farmland in Boardman, Ore., where the family is trying to reopen a former large-scale commercial dairy.

Top creditors

Easterday Farms’ top 20 creditors with the largest unsecured claims include: Two Rivers Terminal in Pasco — $4.3 million; CHS SunBasin Growers of Quincy — $4.4 million; Simplot Grower Solutions in Umatilla — $1.5 million; Labor Plus Solutions of Pasco — $454,000; Northwest CPA Group of Richland — $71,000; and Irrigation Specialists in Pasco — $40,000.

Other creditors include: Benton and Franklin PUDs, the Benton Franklin Health District, the Benton Franklin Fair & Rodeo and Market Stock, Bergstrom Aircraft, BNSF Railway, Milne Nail Power Tool & Repair, Ranch & Home, Lourdes Occupational Health Center, the Port of Pasco, Costco and the Columbia Basin Junior Livestock Show.

The cities of Pasco, Richland and Boardman, and the Franklin County clerk and treasurer are named, along with almost all of Washington state’s government agencies.

The creditor list also shows the Commodity Futures Trading Commission and the Internal Revenue Service, as well as several Easterday family members and “student accounts” at William & Mary college in Virginia.

In the Easterday Ranches’ case, Tyson Fresh Meats tops the top-20 list with “at least $225,000,000” in an unsecured claim for litigation.

Segale Properties, a commercial real estate company in Tukwila, is owed over $8.6 million for a loan, followed by Animal Health International in Sunnyside for nearly $1.1 million.

The other 17 creditors that round out the list involve trade debts between $10,000 and $490,000. They include Brad Curtis Farms of Mesa, Pegram Construction of Othello, Tri-Cities Grain in Pasco, Oregon Trail Veterinary Clinic in Hermiston and Yakima Mechanical.

The remaining creditors list in the Easterday Ranches bankruptcy is 40-pages, and ranges from trucking companies, parts dealers and fueling stations to machinery sales and feed stores. It also includes government agencies in Washington, Oregon and Idaho.

Family ties

An attachment to the bankruptcy filing shows that Cody Easterday and his wife Debby, along with his mother Karen L. Easterday, all resigned their officer positions with family businesses before seeking protection.

Karen Easterday just lost her husband, the longtime family patriarch Gale Easterday, in a Dec. 10 head-on crash on Interstate 182 in Pasco.

The family transferred control of the partnership to a group of “independent directors,” who adopted changes on Jan. 31, one day before the first bankruptcy filing.

Those changes include hiring T. Scott Avila and Peter Richter with Paladin Management Group to serve as co-chief restructuring officers. Richter also is the secretary.

The board will make business decisions, including paying about 130 full-time and 90 part-time employees, and complying with purchase contracts with other companies that do business with Easterday Farms, according to The Spokesman-Review.

State investigation

The state Department of Agriculture also has launched an investigation into the apparent ghost herd and Easterday’s records.

Since the Easterday feedlot was one of only 11 certified in the state, however, the only time cattle would have been subject to a physical inspection would have been when they arrived at the feedlot, reported The Spokesman-Review.

After that, Cody Easterday was in charge of filing paperwork necessary to comply with a contract with Tyson Fresh Meats to buy cattle and pay to feed them.

As for how the alleged fraud took place, the Spokesman-Review said Avila wrote in the court documents that Cody Easterday “purportedly engaged in fraudulent ‘forward billing’ practices” that caused Tyson to overpay more than $200 million for cattle that didn’t exist.

Last week, U.S. Bankruptcy Judge Whitman Holt agreed that both of the Easterday bankruptcies will be handled together.

The bankruptcies come about five months after Spokane-based Washington Trust Bank approved a $45 million line of credit for the operation, reported the Spokesman-Review.

Washington Trust also helped secure a $1.7 million Payroll Protection Program loan from the U.S. Small Business Administration for Easterday Farms and $876,000 from the pandemic-relief program for Easterday Ranches, both in April, said the newspaper.

That means the farming operations obtained about $2.6 million in PPP loans in the months before Tyson’s allegations of years-long fraud came to light regarding the missing herd that Easterday Farms was reportedly being paid to feed.

This story was originally published February 18, 2021 at 5:00 AM.