Dave Dewitte • EasternIowaBusiness.com
The issue of who pays the delinquent property taxes left by Agriprocessors apparently wasn’t addressed in the company’s bankruptcy, leaving Allamakee County and new owner to argue over a $577,872.73 bill.
Allamakee County said in a statement this week that the kosher meat processing plant property in Postville is listed to be sold at a tax sale on June 21.
Shalom Jacob, a New York-based attorney for current owner SHF Industries, said through a spokeswoman that the company never received the tax bill, and wasn’t notified of the county’s attempt to collect until May.
The bills had been sent to Agriprocessors and a related company, Neville Properties, Jacob said.
Montreal businessman Hershey Friedman’s SHF Industries acquired the plant out of the bankruptcy liquidation of Agriprocessors in August 2009. It was part of a package of assets the company bought free and clear of liens and encumbrances, Jacob said.
An attorney hired to help Allamakee County collect the taxes said the county was never notified by the bankruptcy court of any plans to sell the plant free and clear of liens.
“If the county had any idea they were trying to sell the real estate free and clear of encumbrances we would have filed an objection,” said attorney Wesley Huisinga of Shuttleworth & Ingersolll PLC, Cedar Rapids, representing the county.
Huisinga said the senior tax lien against the property “follows the real estate,” so that the current owner of the real estate is responsible for satisfying the tax obligation.
SHF bought Agriprocessors by paying a St. Louis-based lender to satisfy its lien against the Agriprocessors property. No cash was paid to satisfy the many other creditors, and so the bankruptcy trustee did not have funds to settle the property taxes owed in the sale.
The situation appears to have the making of a lawsuit. Allamakee County says it hired Huisinga in part to deal with the threat of an injunction by SHF Industries to block the June 21 sheriff’s sale.
The county and SHF had been in talks about the tax matter through their attorneys before the county issued a statement on Wednesday, June 10, inviting investors to bid on the plant assets at the tax sale, and calling on Agri Star to pay the taxes.
“It is our position we are not responsible for any unpaid taxes that were accrued under the previous owners,” Jacob responded. He said that since SHF purchased the plant, Friedman and his team have made significant investments on modernization and upgrades, and increased employment to 500.
If a bidder acquires the tax certificate for the plant real estate at the county’s tax sale, SHF Industries would still be able to redeem the property within a specific time frame by paying taxes, interest and penalties.
[Hat Tip: FGBA.]