Judge: Seed firm CEO must repay creditors

Friday, Feb. 4, 2005 | 10:54 a.m.

A Las Vegas bankruptcy court judge has ordered the former CEO of bankrupt seed producer AgriBioTech Inc. to pay $14.87 million to creditors after finding he received a preferential loan repayment ahead of other creditors.

U.S. Bankruptcy Court Judge Linda Riegle made the ruling on Jan. 26 following a December trial. The judgment was made against Richard Budd, of Winston-Salem N.C., and ABT Group LLC, an entity he established to loan money to AgriBioTech in 1999, attorneys for plaintiff Anthony Schnelling, the creditor trustee in the case, said.

Neither Budd or his attorneys could be reached for comment.

AgriBioTech made a $10 million loan repayment to Budd and ABT Group in June 1999. The company filed for Chapter 11 bankruptcy protection in January 2000 and a reorganization plan was filed in bankruptcy court in 2001.

The company's assets were liquidated as a part of that plan.

The bankruptcy left hundreds of farmers in Idaho, Washington and Oregon along with other creditors with $62 million in unpaid debts, David Bryant, a Dallas-based attorney for Schnelling, said.

"This is an important step in the trustee's tireless efforts to bring justice to hard working farmers and other creditors who were hurt by ABT's bankruptcy," Bryant said.

The company's creditors have reached settlements for more than $18 million with the company's former officers, directors, employees and consultants. Those agreements settled allegations in a lawsuit filed in U.S. District Court in 2002 that alleged that the company's directors, officers, employees and consultants defrauded creditors and investors by misleading them about the financial health of the company.

However, that litigation in U.S. District Court is pending against AgriBioTech's accountant KPMG LLP and Budd. Additionally Schnelling filed a third lawsuit in bankruptcy court in October alleging Budd has transferred $11 million in assets and property to his family members in order to avoid paying the judgments. On Wednesday Riegle denied motions to dismiss that lawsuit, Bryant said.

"Basically, we've got a judgment for about $15 million, but I believe if I ask Mr. Budd to pay it, he'll say 'I don't have anything,"' Bryant said. "I believe Mr. Budd is in control of those assets. They may not be in his name, but I believe he has effective control."

Budd is former chairman of Winston-Salem-based company The Budd Group. The company provides janitorial, landscaping and security services.