In a significant development for one of Idaho's largest agricultural bankruptcy cases, Chief U.S. Bankruptcy Judge Noah G. Hillen has issued a mixed ruling on competing disclosure statements for the reorganization of Millenkamp Cattle, Inc. and its nine affiliated debtors. The April 25 order partially sustains and partially overrules multiple objections to disclosure statements filed by the Debtors and creditor Rabo AgriFinance LLC.
The ruling, which addresses numerous creditor concerns about the adequacy of information provided in both disclosure statements, moves the complex Chapter 11 case forward while requiring several supplemental disclosures from the Debtors before creditors vote on competing reorganization plans.
"Disclosure statements are not designed for the public at large. They are intended for a discrete audience: those creditors whose votes on a plan are being solicited," Judge Hillen wrote, citing established case law on the standard for adequate information under Section 1125 of the Bankruptcy Code.
The case, filed in the U.S. Bankruptcy Court for the District of Idaho (Case No. 24-40158-NGH), has evolved into a contested proceeding with Millenkamp Cattle proposing its Fourth Amended Chapter 11 Plan while secured creditor Rabo AgriFinance has advanced its own competing plan dated April 1, 2025.
Among the most significant objections sustained by the court was East Valley Development's concern regarding potential rejection damages. Judge Hillen ordered Millenkamp to include language disclosing that EVD "anticipates asserting rejection damages claims of over $100 million against the Debtors' estates" related to executory contracts involving a Manure Separation Facility and Methane Digester project, which "could materially impact the recoveries of other general unsecured creditors."
Conterra Holdings, LLC raised twenty separate objections to the Debtors' disclosure statement, with the court sustaining four that required additional information about selective releases of claims, judgment liens and title impediments, payment continuation after default, and whether sales proceeds would be used to fund equity holders' personal tax obligations.
"The Court will sustain this objection and require Debtors to supplement its disclosure statement and state whether the Debtors intend to pay sales proceeds from the sale of assets to equity holders to fund equity holders' personal income tax obligations," Judge Hillen ruled on one key point.
The court overruled numerous other objections, including several that Judge Hillen characterized as confirmation issues rather than disclosure adequacy matters. These included challenges to interest rate reductions, plan treatment of secured creditors, and the selection process for the plan administrator.
The ruling also addressed objections to RAF's competing disclosure statement, most of which had been resolved by stipulation between the parties prior to the court's decision. The court overruled Debtors' remaining objection that RAF failed to disclose potential fiduciary duties, noting that "whether RAF will obtain control of Debtors' equity interest and what fiduciary duties that will implicate is not information known at the time of the filing of RAF's Disclosure Statement."
With these rulings, both disclosure statements appear poised for approval once the required supplemental information is provided, setting the stage for creditor voting on the competing reorganization plans in the coming weeks.
The case highlights the challenges of restructuring complex agricultural operations, especially with multiple related entities and competing interests from secured and unsecured creditors. The Millenkamp enterprise includes cattle operations, dairy facilities, and various property holdings across multiple legal entities that are being jointly administered in bankruptcy.
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