By Jacob Bunge
The bankruptcy filing of an Illinois grain-shipping company
spotlights the continued fallout from China's 2013 rejection of
U.S. corn shipments, which roiled international grain markets and
triggered a flurry of lawsuits.
Trans Coastal Supply Co. sought Chapter 11 bankruptcy protection
from creditors late Thursday, blaming losses and broken sales
contracts after China began rejecting corn shipments in late 2013,
when Chinese officials detected a genetically engineered strain
that Beijing hadn't yet approved.
The filing by the Decatur, Ill., company comes as it and other
grain-trading companies, including Cargill Inc. and Archer Daniels
Midland Co., pursue a lawsuit against Syngenta AG, the Swiss
agribusiness that makes the biotech corn that came under
scrutiny.
Trans Coastal's filing in the U.S. Bankruptcy Court for the
Central District of Illinois shows how disputes over Syngenta's
Viptera corn continue to reverberate in the U.S. Farm Belt. Grain
companies and farmers have blamed Syngenta for hundreds of millions
of dollars in losses because of rejected shipments and declines in
the market price for corn that they say resulted from the episodes.
Syngenta began selling Viptera in the U.S., Argentina and Brazil in
2011, with those governments' approval, but China didn't approve
the strain until late last year.
More than 180 separate lawsuits have been filed against Syngenta
in the matter.
Syngenta has rejected the arguments and maintained that the
company was transparent in marketing the genetically modified corn,
which is resistant to pests like corn earworms. A spokesman for
Syngenta declined to comment on Trans Coastal on Friday.
Pamela Moses, Trans Coastal's president, told employees and
customers in a letter dated Thursday that the company "had been led
to believe" that the Syngenta strain was soon to be approved for
import into China and that until then it wouldn't turn up in
shipping channels. Trans Coastal ships corn, soybeans and other
commodities to ports across Asia, including China.
"Neither of these things turned out to be true," Ms. Moses
wrote. "The predictable result was a downward spiral that included
abandoned cargos, rejected documents, rejected cargos, devaluation
of markets, and defaulted sales contracts by customers uncertain of
their ability to accept delivery, which, combined with our losses
resulting from the opposite purchase contracts have debilitated our
company."
Lawsuits by creditors also weighed on Trans Coastal, Ms. Moses
wrote. In its bankruptcy filing, the company listed $10 million to
$50 million in both assets and debts.
Ms. Moses didn't immediately respond to requests for comment
Friday.
Trans Coastal hopes to restructure in bankruptcy court, and the
company's lawsuit against Syngenta will continue, said Jayne
Conroy, a lawyer with Simmons Hanly Conroy LLC who is representing
Trans Coastal in the lawsuit.
Trans Coastal and Cargill sued Syngenta over rejected corn
shipments in September. Archer Daniels Midland filed suit two
months later.
Syngenta in June sought to dismiss the lawsuits, which have been
consolidated in a U.S. District Court in Kansas, saying it
shouldn't be held liable for the losses. Plaintiffs in the case on
Monday filed a motion opposing any dismissal, and a ruling on
Syngenta's dismissal request is expected by early September,
according to Ms. Conroy.
Write to Jacob Bunge at jacob.bunge@wsj.com
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