Texas Packer Ordered to Repay $38 Million to Livestock Sellers
By Tom Johnston
Kane Beef must repay nearly $38 million to Texas livestock sellers as part of an agreement with the U.S. government to comply with the Packers and Stockyards Act, U.S. Attorney Ryan K. Patrick announced Wednesday in a news release.
The agreement, which followed a federal court hearing in the company’s home base of Corpus Christi, first requires Kane to follow that federal law, which requires packers to pay for livestock purchases by the next business day after those transactions are completed.
The company then also agreed to an 18-month repayment plan to fully cover the nearly $38 million it owes local livestock suppliers. It’s the latest money trouble for Kane Beef, which is in the midst of paying $2.38 million it owes Corpus Christi for delinquent water bills and another $400,000 it owes in unpaid property taxes.
The U.S. Attorney’s Office for the Southern District of Texas took action after receiving two complaints on June 14 alleging that, as of June 8, Kane Beef owed $34.96 million to unpaid livestock sellers, at an average 38 days late and as many as 60 days late. The complaints allege that the company’s failure to pay on time forced them to file claims under the packer statutory trust totaling more than $142 million.
USDA had filed an administrative complaint alleging Kane failed to pay the full purchase price for livestock within the time period required by the P&S Act on numerous occasions from on or about Jan. 27, 2017, through the date of the complaint. The P&S Act authorizes civil penalties of up to $11,000 per violation. Among other stipulations, the law also empowers the Department of Justice to seek injunctive relief while administrative enforcement actions are pending before the USDA.
Both complaints follow a Secretary of Agriculture order issued Jan. 17, 2017, requiring Kane to cease and desist from failing to pay when due the full purchase price of livestock. They also allege that the company violated this order.
Another stipulation of the agreement reached Wednesday is that Kane Beef must appoint an independent chief restructuring officer to ensure compliance with the pact. If the company fails to make any of the payments as agreed or fails to abide by any terms of the agreement, the court will appoint a receiver to manage its finances, the U.S. attorney said.