LINCOLN, Neb. (DTN) -- A group of Texas farmers is concerned if Hansen-Mueller Co.'s asset sale proceeds at its current pace -- set to begin this week -- chances are they will not be paid what the company owes them for grain deliveries.

Eleven Texas farmers and other agribusinesses are scrambling to prevent Hansen-Mueller from partially funding the Chapter 11 bankruptcy with about $1.4 million owed to them for grain deliveries, according to an emergency motion filed in the U.S. Bankruptcy Court in Nebraska over the weekend.

The farmers have invoked Section 557 of the bankruptcy code, which provides special expedited procedures specifically for grain-producer cases.

The farmers argue Hansen-Mueller is using their grain proceeds as operating cash without the farmers' consent or adequate protection.

The farmers told the court they are owed for grain deliveries made to Hansen-Mueller between June and October of 2025. The company is on track to conduct an asset sale beginning this week, with bids due by Dec. 12 and a possible auction on Dec. 16.

"An expedited process to determine the interest of stakeholders in the grain at issue is imperative in this case," the producers told the court.

"The case is being funded currently from proceeds of the grain without providing real adequate protection to, or obtaining consent from, grain producers who (possess) agricultural liens against the grain and grain proceeds. A prompt determination of interests in the grain is necessary because the debtor in this case continues to use the proceeds of the grain that represent the asserted cash collateral or property of such grain producers and other parties in interest."

They said proceeds from the Texas farmers' grain are at "imminent risk of being swept" by the pre-petition secured lender BMO Bank unless procedures are implemented to protect farmers.

"In the meantime, any sale order must expressly reserve producer lien rights, and there any distributions to BMO Bank or other lenders should not be allowed to occur until section 557 determinations are made," the motion said.

According to the motion, under Texas Property Code, the farmers have automatically perfected agricultural liens with "super priority" over even pre-existing bank security interests. BMO Bank's position is that it has blanket inventor liens and likely wants first claim to proceeds.

A perfected lien is a binding document that allows a lien holder to enforce their right to property -- in this case, grain.

Under section 557, when it is invoked, the court must expedite proceedings, mandate accounting, segregation of proceeds and protect farmer interests.

The motion was filed on behalf of Justin Hansen, Hansen Farms; Richard Beyer, Richard A. Beyer Farms; USB Joint Venture, Albert Urbanek; Kyle Miller; Dustin Mikel, Mikel Brothers Partnership; J&K AG LLC, James Alan Wrobliski and Levi Abrahamson; Hlavinka Cattle Co. JV, Kenneth Hlavinka; Maass Farms, General Partnership, Austin Dale and Joshua Birdwell; Haunted Hill Grain, LLC, Matt Hargrove; AKA Farms, a Texas Partnership, Austin Dale, Aaron Martinka; and Elliott AGCO, General Partnership, Travis Elliott.

According to the motion, the largest claim among the group is USB Joint Venture's $253,646.

Read more on DTN:

"Hansen-Mueller Asset Sale in December," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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