Lempriere grain trader shock

Horsham solicitor and The Weekly Advertiser It’s The Law columnist Patrick Smith has provided insight into reports that grain trader Lempriere Grain has gone into voluntary administration. Mr Smith has provided insight into what developments mean for regional farmers involved with the trader and how the issue might unfold.

On Friday last week, grain trader Lempriere Grain went into voluntary administration.

This is alarming news for many Wimmera farmers who have had contracts to sell grain with the company.

Lempriere Grain has a major office in Ballarat and has been selling grain on behalf of Wimmera farmers since about 2003.

The news of its voluntary administration has come as a shock to many.

One Rupanyup farmer, who wishes to remain anonymous, said: “We’ve been delivering grain to Lempriere Grain for a good five years. Because they always paid well, we had no hesitation in dealing with them again last year.

“I became very concerned when my grain broker called me last Thursday to tell me that Lempriere Grain was likely to be placed into voluntary administration.

“They’re about a month overdue on a payment of almost $100,000.

“I didn’t put all my grain through Lempriere, and it wasn’t as much as other years, but it is still a great deal of money. We work all year to grow crops and then we don’t get paid.

“We’ve got bills to pay; we’ve got loads of super coming for this year’s crop that needs to be paid for.”

Lempriere Grain going into administration is worrying for Wimmera farmers who have outstanding contracts with the trader.

The voluntary administration of Lempriere Grain will conclude in one of three ways.

There is a slight possibility the company is returned to the directors’ control. However, this is unlikely.

It is more likely that either a deed of company arrangement is approved by creditors setting out how the company will pay all or part of its debts or the company is wound up and a liquidator is appointed.

Regrettably, grain buyer insolvencies have hurt Wimmera growers many times before.

In addition to growers not being paid for grain supplied, there are also stories about farmers being forced, by liquidators during previous grain buyer insolvencies, to repay money they had received for their grain.

There is a possibility that a liquidator could seek to recover payments already made to growers.

A liquidator appointed to Lempriere Grain might attempt to recover money under an Unfair Preference provisions of the Corporations Act if Lempriere Grain has been trading while insolvent.

However, there are ways farmers can avoid a court-ordered recovery or ‘claw-back’ of a payment.

Growers should not comply with a request by the liquidator to repay a payment immediately. Instead, they should speak to a solicitor about their options to resist the request.

While growers with contracts with Lempriere Grain will likely suffer the most from the buyer’s move into voluntary administration, the move will also likely have a flow-on effect to other businesses and individuals across the Wimmera.

– Patrick Smith is a solicitor with O’brien Lawyers, Horsham.