Contract analysis

I. Executive Summary On December 12, 2022, the Circuit Court of Sangamon County, Illinois entered an Order Appointing Receiver over Prairie Basin Grain Co. ("PBGC") in Case No. 2022-CH-001247 (the "Receivership Order"). The court appointed Gareth J. Whitmore, CPA, CIRA, of Whitmore Strauss Advisory LLC, 500 East Monroe Street, Suite 300, Springfield, Illinois 62701, as receiver for all assets and operations of PBGC.

II. Background A. The Cook County Collection Action On May 9, 2022, GAP filed a four-count Complaint in the Circuit Court of Cook County, Illinois, Law Division, Case No. 2022-L-004831, assigned to the Honorable Patricia Delacroix. The action arises out of PBGC's failure to make payments for agricultural commodities delivered by GAP under an Off-Take Agreement dated March 15, 2019 (the "Off-Take Agreement"), pursuant

III. The Receivership Order A. Procedural Posture of the Receivership On November 28, 2022, Heartland Prairie Bank, N.A. filed a Verified Petition for Appointment of Receiver (the "Petition") in the Circuit Court of Sangamon County, Illinois, Case No. 2022-CH-001247. The Petition was filed in the Chancery Division, reflecting the equitable nature of receivership proceedings under Illinois law. HPB filed the Petition

IV. Analysis of the Automatic Stay A. Scope and Effect on the Cook County Action The automatic stay imposed by the Sangamon County Receivership Order bars GAP from continuing to prosecute its claims against PBGC in the Cook County action. Specifically, the stay prevents GAP from pursuing Counts I, III, and IV of the Complaint—that is, the breach of contract, account stated, and unjust enrichment claims, all of which

V. GAP's Options for Asserting Claims in the Receivership A. Filing a Proof of Claim GAP should promptly file a Proof of Claim in the Sangamon County receivership proceeding, Case No. 2022-CH-001247, asserting its full claim against PBGC. The Proof of Claim should set forth the nature and basis of GAP's claim, the total amount claimed, and the supporting documentation. Specifically, the claim should include the follo

1. Administrative expenses of the receivership — including the receiver's fees and expenses, receiver's counsel fees, and costs of administering the estate;

2. Secured claims — principally HPB's senior secured claim of approximately $31.4 million, to the extent of the value of HPB's collateral;

3. Priority unsecured claims — if any (e.g., certain tax claims, employee wage claims);

4. General unsecured claims — including GAP's claim and the claims of other trade creditors; and

5. Equity interests — Darren K. Musgrave (72% owner) and any other equity holders. Given the estimated financial condition of PBGC—with total liabilities of approximately $58 to $62 million and total assets of approximately $35 to $40 million—the shortfall is substantial. HPB's secured claim of approximately $31.4 million will consume the vast majority of the available assets. After satisfaction of HPB's claim and pa

VI. Status of the Musgrave Guaranty Claim (Count II) A. Scope of the Receivership Stay as to Musgrave The Receivership Order appoints a receiver over PBGC and its assets. Critically, it does not place Darren K. Musgrave individually into receivership. The receiver's authority extends to PBGC's business, assets, and operations—not to the personal assets or obligations of PBGC's individual owner. Count II of the Cook C

VII. Recommendations Based on the foregoing analysis, I recommend the following course of action: A. Immediate Steps

1. Comply with the Automatic Stay. GAP must immediately cease all litigation activity in the Cook County action, Case No. 2022-L-004831. No discovery may be propounded or enforced, no motions may be filed, and no affirmative steps may be taken to advance the litigation against PBGC while the receivership stay is in effect. This office has already suspended all active work on the Cook County litigation upon receipt of

2. Contact Receiver's Counsel. GAP should promptly send a letter to the receiver's counsel, Joanna M. Lockridge of Lockridge Payne LLP, 120 South Sixth Street, Suite 1800, Springfield, Illinois 62701, formally asserting GAP's claim against PBGC, providing a preliminary summary of the claim and its basis, and requesting information about the claims process and the anticipated claims bar date. I recommend that this let

3. Prepare and File Proof of Claim. GAP should prepare and file a comprehensive Proof of Claim in Sangamon County Case No. 2022-CH-001247 asserting the full amount of its claim, including principal of $4,870,050.00, accrued interest of approximately $492,341.00, and attorneys' fees and costs of $302,037.85, for a total of approximately $5,664,428.85. The Proof of Claim should be supported by the documentation describ

4. Advise GAP Management. GAP's management—specifically Thomas R. Greenfield (Managing Member), Margaret A. Greenfield-Wu (Chief Operating Officer), and Caleb Jennings (Chief Financial Officer)—should be promptly advised of the receivership, the automatic stay, its impact on the Cook County collection action, and the realistic prospects for recovery. I recommend scheduling a conference call or in-person meeting durin

1. Preserve the Claim. GAP must not release, waive, settle, or otherwise compromise the Musgrave Guaranty claim without careful analysis and a deliberate decision that doing so is in GAP's best interest. The claim should be expressly preserved in any correspondence, dismissal filings, or communications with the receiver, receiver's counsel, or Musgrave.

2. Monitor the Statute of Limitations. The ten-year statute of limitations under 735 ILCS 5/13-206 for written contracts governs the Musgrave Guaranty claim. The claim accrued no later than February 18, 2022, giving GAP until February 18, 2032, to refile. This date should be calendared and tracked by both C&H and GAP.

3. Investigate Musgrave's Financial Condition. Before making a decision about whether to refile the Musgrave Guaranty claim, GAP should conduct an investigation into Musgrave's personal assets and financial condition. This investigation could include public records searches (real property records, UCC filings, litigation searches), asset-search services, and, if GAP decides to refile, formal discovery directed at Mus

4. Retain Right to Refile Independently. If the voluntary dismissal of the Cook County action covers all defendants including Musgrave, GAP retains the right to refile the Musgrave Guaranty claim independently—i.e., in a separate action solely against Musgrave—at any time before the statute of limitations expires. This flexibility may be valuable, as GAP can choose the timing and forum for the guaranty claim based on

1. Receivership Proceedings. C&H should monitor all filings, reports, and proceedings in Sangamon County Case No. 2022-CH-001247 on an ongoing basis. Key events to monitor include the establishment of a claims bar date, the filing of the receiver's initial and periodic reports, any proposed asset sales or distributions, any objections to claims, and any motions to terminate or modify the receivership.

2. Triton Mutual Insurance Litigation. C&H should track the status and outcome of PBGC's pending coverage litigation against Triton Mutual Insurance Company. A favorable outcome for PBGC in that litigation could yield up to $3.2 million in insurance proceeds, which could augment the receivership estate and potentially improve recovery prospects for unsecured creditors. Conversely, an unfavorable outcome would confirm

3. Local Counsel. GAP should consider whether to retain local counsel in Springfield, Illinois, to monitor the receivership proceedings, attend hearings, and coordinate with receiver's counsel on GAP's behalf. Alternatively, C&H could request that Lockridge Payne LLP (receiver's counsel) provide formal notices of all receivership filings and hearings, which would reduce the need for separate local counsel but would n

VIII. Conclusion The Receivership Order entered on December 12, 2022, by the Circuit Court of Sangamon County effectively prevents GAP from continuing its Cook County collection action against PBGC. The automatic stay bars all pending litigation and enforcement efforts against PBGC and its assets, and GAP must comply with the stay immediately and in full. GAP's best course of action is to assert its full claim—totali