Judge grants order to feed 54K cattle caught up in Easterday legal case

A bankruptcy judge on Wednesday issued an emergency order directing banks and others to make funds available to allow Easterday Ranches Inc. to continue to feed 54,000 cattle in a feedlot near Wallula, Washington.

The judge ruled in favor of a request by Easterday Ranches after it filed for bankruptcy this week, claiming it owes more than $236 million to its top 20 creditors.

That bankruptcy filing followed a lawsuit filed in state court by Tyson Foods Inc., in which the company alleges Easterday Ranches defrauded it out of more than $225 million related to Easterday’s purchase and feed bills for 200,000 cattle that never existed.

The case of the missing herd has captivated state agriculture officials because court records do not spell out how the alleged scam played out. The filings by Tyson only say that Easterday Ranches President Cody Easterday admitted that for years he has submitted false claims that directly led to Tyson’s $225 million in losses.

“I think we are just like everybody else,” said Patti Brumbach, executive director of the Washington Beef Commission. “We are just watching the situation.”

On Wednesday, U.S. Bankruptcy Judge Whitman Holt issued the emergency order, which was opposed by Washington Trust Bank of Spokane.

In September, the bank approved a $45 million revolving line of credit for Easterday Ranches Inc., which gives it a “security interest” in nearly all property and equipment owned by the company.

In court records, Washington Trust Vice President Clair Baker states Easterday Ranches recently sold its North Lot feedlot for about $15 million. It then transferred $5.8 million to its other entity, Easterday Farms Inc., even though its own records show it only owed about $3.8 million for feed.

Baker wrote any transfer of funds from one Easterday business to the other was subject to bank approval. She also noted that Easterday Ranches transferred “a significant amount of cattle” from its own holdings to the lot where most of the cattle are under contract for Tyson.

As part of the business agreement, Easterday would purchase cattle and feed them before sending them to slaughter at the Tyson Fresh Foods processing plant at Wallula. Tyson would then reimburse Easterday for the market value of the cows minus the purchase and feeding costs.

Spokane attorney Trevor Pincock, who is representing Washington Trust, objected to the emergency motion seeking to allow Easterday Ranches to continue to draw cash collateral to feed the remaining 54,000 cattle because it remains in dispute whether the cattle there are owned by the Easterdays or by Tyson.

But Whitman sided with the motion brought by Easterday attorney Thomas Buford that asked that enough money be allowed to flow to keep the cattle fed.

Buford, of Seattle, did not immediately respond Thursday to an interview request. Tyson Foods Inc. also did not respond to a similar request.

In a hearing Monday, Buford said he expected Easterday Farms Inc. to file for Chapter 11 bankruptcy protection . Both entities are run by the Easterday family, of Mesa, Washington, which is one of the largest agriculture operations in the state.

Brumbach, who grew up on a dairy near Sunnyside, Washington, said the beef commission serves to educate and promote the beef industry. It’s funded by a $1.50 charge added to the sale of every cow in Washington.

She said she has no clue how 200,000 cows could be missing, as alleged by Tyson.

“We were really disappointed to hear of the alleged case against the Easterdays,” Brumbach said. “They’ve always been a very positive … in participating and have been really great contributors to the work of the industry.”

While Easterday’s legal troubles play out, the pressure falls on smaller businesses around the Tri-Cities that supported the operation and now are scrambling to pay bills.

“It’s just a tough, tough situation,” Brumbach said. “We expect the courts to determine what the proper outcome should be.”