Easterday cash collateral motion draws objection from Washington Trust

By Sarah Lizee

Olympia, Wash., Feb. 3 – Easterday Ranches, Inc.’s cash collateral motion drew an objection from Washington Trust Bank, lender of the company’s $45 million revolving credit facility, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Washington.

The company is seeking to use the cash collateral, in which Washington Trust may assert a perfected security interest, so that the company can continue to feed about 54,000 head of cattle that are owned by Tyson Fresh Meats, Inc.

The bank said it is objecting to the motion because it is not clear that Tyson’s cattle are property of the estate or how feeding and maintaining the cattle benefit the estate.

Washington Trust also said that while the company proposes to grant it adequate protection, it hasn’t filed any credible information that the bank can rely on relating to the protection.

Also, the bank said the motion proposes that an adequate protection lien would not attach to any claims, defenses, causes of action of rights of the debtor arising under sections 542-553 of the Bankruptcy Code or applicable state fraudulent transfer law, which is “unacceptable to [the bank] in light of the fact that there appear to be several instances of potential fraudulent and/or preferential transfers in the weeks prior to the debtor filing its petition.”

Washington Trust requested that the motion be denied or continued until the debtor explains how maintaining Tyson’s cattle benefits the estate, identifies property of the estate upon which the bank’s replacement and/or adequate protection liens would attach, and removes language that prevents the bank’s adequate protection lien from attaching to avoidance actions.

Easterday Ranches is a Pasco, Wash.-based cattle operator. The company filed bankruptcy on Feb. 1 under Chapter 11 case number 21-00141.

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