Lawsuits: Former beef plant workers, contractor not yet paid for jobs

Farm Forum

With the sale of a beef plant on the south side of Aberdeen finalized, what will come of the largest mechanic’s lien filed against the former Northern Beef Packers is slated to be determined next month.

A trial involving the plant and Scott Olson Digging, an out-of-business contractor from Huron, is scheduled for May 27-30 in federal bankruptcy court in Pierre, said Rory King, an attorney for Northern Beef.

In March 2007, Scott Olson Digging filed a $2.11 million mechanic’s lien against the plant. Believing it had been overcharged, the plant then sued the contractor that fall. Scott Olson Digging then countersued.

Scott Olson Digging was hired to do dirtwork at the plant early in the construction process.

King said the Olson Digging lien is a claim against the bankruptcyestate, so the case can be tried in bankruptcy court even though it was filed in circuit court.

The former Northern Beef Packers plant is now called New Angus. The change came after White Oak Financial Advisors bought the plant at a bankruptcy auction.

As part of the bankruptcy proceedings, White Oak established New Angus to oversee and operate the plant. Also doing the bankruptcy wrangling, a judge approved allowing White Oak to create an escrow account in which it set aside money to pay two liens. More than $1 million from the account has been paid to Brown County to bring the plant’s property taxes up to date. And more than $3.3 million was placed in the account to cover the Scott Olson Digging lien, according to court paperwork.

The trial next month will determine how much of the $3.3 million Scott Olson Digging is entitled to.

Most other liens, King said, have been paid off.

He also said that former workers at Northern Beef Packers who were laid off when the plant filed for bankruptcy still stand to be paid. But it’s not yet clear when, he said.

A class action lawsuit filed by former plant employee Jorge Alvarado on behalf of other former workers seeks enhanced wages. He claims the workers weren’t given proper notice under the federal Worker Adjustment and Retraining Notification Act.

King said the plant is contesting the so-called WAIN Act claim. The case remains unresolved.

White Oak offered the top bid for the plant at a Dec. 5 bankruptcy auction in Sioux Falls. It totaled $44.35 million, which included $39.5 million in credit and $4.85 million in cash. White Oak lent Northern Beef $35 million in fall 2012, the basis for the credit portion of its bid.

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