More trouble for bankrupt Agfeed

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AgFeed Industries Inc. was recently given the green light to sell its U.S. operations to a trio of its competitors, but now, Law360 reports that the staff of the U.S. Securities and Exchange Commission (SEC)  has “preliminarily decided to recommend an enforcement action be brought against” it on alleged violations of anti-fraud provisions of securities laws.

The preliminary determination, or Wells notice, was issued in connection to a previously disclosed SEC investigation surrounding accounting errors and irregularities in the Company’s feed mill and legacy farms businesses in China, which resulted in errors and misstatements in the Company’s financial statements from 2007 through the second quarter of 2011.

“The Wells notices do not constitute a formal allegation or a determination that the company or any of the officers violated any law,” AgFeed said in the filing. “Upon receipt of a Wells notice, the recipient has the opportunity to make a "Wells submission" presenting the recipient's positions with respect to the staff's recommendation before the staff makes a formal recommendation to the commission regarding what action, if any, should be brought by the commission.”

The notice raises allegations that AgFeed violated the anti-fraud, reporting, books and records and internal controls provisions of the federal securities laws, according to the filing. Read, “Bankrupt AgFeed Discloses SEC Tentative Action Notice.”

AgFeed filed for Chapter 11 bankruptcy protection in mid-July, and Illinois-based pork producer The Maschhoffs agreed to buy most of AgFeed’s U.S. assets for $79 million in cash but only if no other party came forward offering more.

A dispute with Hormel Food Corp was cited in leading to default on its debt, according to Bloomberg.

For more information on AgFeed’s bankruptcy, read “Murphy Brown, Cohoma Pork, High Plains Pork to buy AgFeed” or “The Maschhoffs agrees to buy Agfeed USA.”

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kansas  |  September, 13, 2013 at 12:11 PM

Doesn't anyone see the connection, and irony, in this relating to the current deal to sell Smithfield to another PRChina puppet-corp? Smithfield US corp sale TO China sails through Fed review, despite obvious dangers and problems, capped with a ridiculous and embarrassing false statement from "un-named gov. source". While a sale of US assets from the other China corp TO US businesses is jammed-up over accounting fraud allegations against the China corp... and no one says diddly? AgFeed is Typical of Chinese Business, and the same questionable practices (fraud/deception) WILL be central to the new Smithfield owners. Where is the in-depth investigative reporting - from anyone? Ag press? International press? Financial press? This is a Big Deal people, that involves the strategic interests of the US as well as both Western & Eastern Europe. There is NO Free Market or Private Enterprise in the Peoples' Republic of China... the drivel Friedman writes for the NYT is a lie and a fraud. China is a Totalitarian State that seeks to undermine and over-take the West. They're still Maoists, behind the inscrutable smiles and the insincere bows.

California  |  September, 19, 2013 at 10:16 AM

The sale of AgFeed USA has been approved by the court and will now close. It is not being held up. But, the story does go on for the China assets (AgFeed, British Virgin Islands, aka BVI) as you point out, and it is a big deal worthy of investigative reporting. Currently, Nigbo Bank has offered $50.5 million plus assuming some $7 million in debt for AgFeed BVI. Looks like significant wquity will be left for the shareholders after the breakup occurs.


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