Stipulation and agreed order require Dean Foods to pay 90% of its USDA milk marketing obligations after bankruptcy

On January 15, 2021, the Honorable Chief Justice David R. Jones, of the United States Bankruptcy Court for the Southern District of Texas, executed and entered into a Stipulation and Agreed Order (Order) between the United States Department of Justice (DOJ), who is official legal counsel to the United States Department of Agriculture (USDA) and Dean Foods.

The order requires Dean Foods to pay within 30 days $29,082,182.26, or 90% of its USDA obligations for milk marketed in April 2020 and May 2020.

On November 12, 2019, Southern Foods Group, LLC, et al., (Dean Foods) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. At that time, Dean Foods had 43 factories regulated by the Federal Milk Marketing Ordinance (FMMO) system. After the filing date, Dean Foods, as debtor in possession (Dean DIP), did not make payments to the USDA for milk marketed from April 1, 2020 through May 4, 2020, for a total of 32,313 $535.84. The missed payments included amounts owed to the FMMO program, the National Milk Research and Promotion Program and the National Fluid Milk Processors Promotion Program.

Upon receipt of payment, USDA will remit monies owed to FMMO-regulated handlers and Dairy and Fluid Milk Promotion Boards. Once handlers receive payments from the USDA, FMMO regulations require that the money be promptly returned to producers.

Procedures for payment from Managers to Producers will be communicated by the respective FMMO Market Administrators.

Dean Foods’ $16 million pre-petition debt owed to the USDA is not covered by this stipulation and approved order. The USDA timely filed proofs of claim for these pre-petition obligations and will continue to pursue payment of these claims in the bankruptcy proceedings.

Comments are closed.