Foreclosure action pending on Herington fertilizer business
A large fertilizer business established in 1990 at Herington was forced to shut down in July when it was "unable to generate enough income to handle a heavy load of debt," according to an article in the Oct. 16 issue of The Herington Times.
A major mortgage foreclosure action is pending against Sunflower Services, Inc., according to writer and editor Larry Byers, who obtained Morris County court records. Other lawsuits have been filed by suppliers and vendors.
The foreclosure lawsuit was brought by Sunflower Bank of Salina, the first lien holder. The plaintiff alleges the company owes $1,874,041.50 and has $4 million worth of real estate, accounts, inventory, and equipment, which is subject to foreclosure and repossession.
The majority stockholder, James Arthur Otte of Kansas City, has filed for Chapter 7 bankruptcy, although the corporate entity, Sunflower Services, Inc., has not.
According to Otte, the firm wrote off more than one million dollars in un-collectable accounts in 2002.
After its establishment in 1990, the company grew rapidly. By the year 2000, it employed 29 full-time and six part-time employees. It served customers within a wide area and maintained a branch facility at Alta Vista, which employed three people.
Together with Otte, more than 25 minority stockholders, most of whom reside in Morris, Dickinson, and Marion counties, have lost their original investments in Sunflower Services, Inc., stock, because "the company is believed to have a negative net worth," the article stated.
The situation is complex and may include lawsuits against farm owners and operators who continue to owe the business.
More than 20 parties are listed as defendants besides the corporation. These include the City of Herington, which made an unsecured loan to the company. The city potentially also could be liable for a CDBG (Community Development Block Grant) it helped the company obtain from the state.
The city has requested the loan monies be forgiven by the state.
A court-appointed receiver has been placed in charge of the company's assets and all procedures necessary to settle the case.
"The shutdown of Sunflower Services, Inc., is one that will definitely have a long-term impact in the agriculture sector of the economy," Byers concluded.
"Repercussions from the business failure aren't expected to disappear or fade from the local scene for many months to come."
