YAKIMA, Washington — Two major creditors Wednesday, July 14, dropped their opposition to the sale of Easterday farms, clearing the way for the Mormon church to buy an Eastern Washington family farm brought down by debt and fraud.
Prudential Insurance Co. and Equitable Life Insurance agreed to withdraw their objections during a mid-hearing break in U.S. Bankruptcy Court in Yakima. In return, they are guaranteed to receive most, if not all, of the millions of dollars owed them by Cody Easterday, his wife, mother and their companies.
The parties, returning from the closed conference, outlined the agreement to Judge Whitman Holt, settling a dispute that had threatened to block the $209 million acquisition by Farmland Reserve Inc., affiliated with the Church of Jesus Christ of Latter-day Saints.
How sale proceeds will be divided among creditors and the Easterday family will be decided later.
Farmland Reserve does business in Washington as AgriNorthwest and already owns 100,000 acres. It’s poised to add 18,000 acres, including 12,000 irrigated acres, in Benton County.
Most of the Easterday properties border AgriNorthwest land, according to the church-affiliated organization.
“Our successful bid reflects our long-term commitment to Columbia Basin agriculture. We will be growing crops on these fertile fields for decades to come,” Farmland CEO Doug Rose said in a statement.
The Easterdays filed for bankruptcy in February as Cody Easterday faced a federal investigation that he schemed to defraud Tyson Foods and another company by billing them to buy and feed nonexistent cattle.
Easterday pleaded guilty March 31 to one count of wire fraud and agreed to pay $244 million in restitution. He faces a prison term and is scheduled to be sentenced in federal court Oct. 5. He also faces charges that he defrauded the Commodities Futures Trading Commission.
Farmland Reserve outbid a company associated with Bill Gates for properties commonly known as the Cox Farm, Goose Gap Farm, Nine Canyon Farm, River Farm, Farm Manager House and Storage Complex.
The sale will involve dozens of parcels owned by Easterday Farms, Easterday Ranches or individual Easterdays. Complex partnerships threatened to stall the sale.
Prudential and Equitable had claimed that the proposed bankruptcy sale included privately held property not eligible to be sold free of liens in a Chapter 11 bankruptcy, meant to reorganize business holdings.
According to court records, the Easterdays borrowed $50 million in 2020 from Prudential to operate their businesses, putting up various properties as collateral.
Prudential, in court records, said that with interest the Easterdays owed $57 million.
Equitable said in a court filing it was owed about $29 million.
Late July 14, Prudential formally objected to the sale, echoing an objection filed in June by Equitable. Both argued the judge should block the sale unless Prudential and Equitable were guaranteed to be paid in full, including at a higher interest rate charged to loans in default.
The attorney spearheading the sale, Richard Pachulski, said bundling the properties would maximize their value and that ownership and allocation issues could be worked out later.
Under the agreement outlined in court, Prudential and Equitable will be repaid at the higher default interest rate, though Easterday Farms and Easterday Ranches reserved the right to seek to regain some of the money later.
The Easterday farm was started in 1959 by Ervin Easterday, Cody Easterday’s grandfather. Farmland Reserve has been farming in the same area since 1968.
“We have been neighbors with the Easterday family for more than 50 years. The close similarity of soils and crops grown represents a unique opportunity for these lands to be combined almost seamlessly with AgriNorthwest,” AgriNorthwest Vice President Pat Tolman said in a statement.