UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION
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In re:
GREENFIELD AGRICULTURAL PARTNERS LLC,
Debtor.
EIN: 42-8837291
Case No. 25-01147
Chapter 11
Hon. Margaret R. Dunleavy U.S. Bankruptcy Judge
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DEBTOR'S EMERGENCY MOTION FOR ENTRY OF AN ORDER AUTHORIZING, BUT NOT DIRECTING, THE DEBTOR TO PAY PRE-PETITION CLAIMS OF CRITICAL VENDORS AND ESSENTIAL SERVICE PROVIDERS PURSUANT TO 11 U.S.C. §§ 105(a) AND 363(b)
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Greenfield Agricultural Partners LLC, as debtor and debtor-in-possession (the "Debtor" or "Greenfield"), by and through its undersigned counsel, Calderwood & Harkness LLP, hereby files this Emergency Motion (the "Motion") for entry of an order, substantially in the form attached hereto as Exhibit A (the "Proposed Order"), authorizing, but not directing, the Debtor to pay pre-petition claims of certain critical vendors and essential service providers in an aggregate amount not to exceed Twelve Million Dollars ($12,000,000), and in support thereof respectfully represents as follows:
I. PRELIMINARY STATEMENT
1. On May 15, 2025 (the "Petition Date"), Greenfield Agricultural Partners LLC filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in this Court. The Debtor continues to manage and operate its business and properties as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or official committee of unsecured creditors has been appointed in this case as of the filing of this Motion.
2. The Debtor is a vertically integrated agricultural chemicals manufacturer and distributor headquartered at 1400 Prairie Ridge Drive, Cedar Falls, Iowa 50613. Greenfield is one of the leading specialty agricultural chemicals companies in the Midwest and Mid-South regions of the United States, with a product portfolio that includes herbicides, fungicides, adjuvants, and seed treatments. The Debtor's flagship product, ClearGuard XR herbicide, is a widely used post-emergence herbicide for corn and soybean applications and is a cornerstone of the Debtor's revenue base.
3. The Debtor operates three manufacturing plants located in Cedar Falls, Iowa; Decatur, Illinois; and Jonesboro, Arkansas. In addition, the Debtor maintains fourteen regional distribution centers strategically positioned across the Midwest and Mid-South to serve its customer base. The Debtor also operates a 640-acre research and development farm in Ames, Iowa, which supports ongoing product development and field trial activities. As of the Petition Date, the Debtor employs approximately 2,300 people across these facilities.
4. The Debtor's business is inherently seasonal. The agricultural chemicals industry experiences peak demand during the second and third quarters of each calendar year, corresponding to the spring planting and summer growing seasons. The current DIP budget period — May 15, 2025 through August 13, 2025 — captures the tail of the spring application season and the full summer application season. This thirteen-week window represents the most commercially critical period of the Debtor's fiscal year, during which the Debtor expects to generate the vast majority of its annual operating receipts. Any interruption in the supply of raw materials during this period would be devastating and, as a practical matter, irrecoverable.
5. By this Motion, the Debtor seeks authority, in the exercise of its business judgment, to pay certain pre-petition claims of critical vendors and essential service providers in an aggregate amount not to exceed $12,000,000. The Debtor has identified the vendors and service providers whose continued engagement is essential to the uninterrupted operation of the Debtor's manufacturing plants and distribution network during peak season. Specifically:
(a) The Debtor's top five chemical raw material suppliers are owed an aggregate of approximately $9,400,000 in pre-petition trade payables. These suppliers provide essential active ingredients, surfactants, solvents, emulsifiers, and proprietary adjuvant compounds without which the Debtor's manufacturing operations would grind to a halt. Several of these suppliers have already communicated — either directly or through their legal counsel — that they will not continue shipping raw materials absent payment of their pre-petition balances.
(b) Norris Industrial Services LLC ("Norris"), an Iowa limited liability company, is owed approximately $1,600,000 for a partially unpaid compressor overhaul at the Debtor's Cedar Falls manufacturing plant. Norris has indicated that it will not perform warranty work, ongoing maintenance, or emergency repairs on the critical compressor systems absent payment of this outstanding balance.
(c) The Debtor has identified a limited number of other essential service providers — including logistics providers, specialized laboratory testing services, and EPA-mandated compliance service providers — whose pre-petition claims total approximately $1,000,000 and whose continued engagement is necessary to the Debtor's operations.
6. Failure to pay these claims will result in the disruption of the Debtor's manufacturing operations, the loss of irreplaceable supply relationships, and the destruction of going-concern value during the most commercially important period of the year. The consequences of such disruption would extend far beyond the critical vendors themselves: if the Debtor's manufacturing plants are forced to curtail or cease production, the Debtor will be unable to fill customer orders, will lose market share to competitors, and will suffer a precipitous decline in the revenues upon which the entire restructuring depends.
7. The Debtor has sufficient liquidity to make the critical vendor payments sought herein. As of the Petition Date, the Debtor had approximately $11,800,000 in cash on hand. In addition, the Debtor has filed a contemporaneous motion seeking approval of a $175,000,000 senior secured superpriority debtor-in-possession revolving credit facility (the "DIP Facility") with Ironclad Capital Partners LP as Administrative Agent. Upon entry of the Interim DIP Order — targeted for the hearing on May 22, 2025 — the Debtor will have access to $80,000,000 in interim DIP financing availability. The critical vendor payments are contemplated in the DIP budget and have been reviewed and approved by the DIP Lenders. The Debtor's thirteen-week cash flow projection shows ending cash of $56,750,000, well above the $15,000,000 minimum liquidity covenant under the DIP Facility.
8. The Debtor respectfully submits that emergency relief is warranted. Peak season is underway, and certain suppliers have indicated they will halt shipments imminently absent assurance of payment. Every day of delay increases the risk of supply chain disruption and plant shutdowns. The Debtor therefore requests that this Motion be heard on an emergency or expedited basis.
II. JURISDICTION AND VENUE
9. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334 and the Standing Order of Reference entered by the United States District Court for the Northern District of Iowa. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), as it involves the administration of the Debtor's estate and the use of property of the estate. The Debtor confirms its consent to the entry of a final order by this Court to the extent that any aspect of this Motion is determined to be a non-core proceeding.
10. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The Debtor's principal place of business and its primary manufacturing facility are located in Cedar Falls, Iowa, within this District.
11. The statutory predicates for the relief sought herein are sections 105(a) and 363(b) of the Bankruptcy Code, together with the "doctrine of necessity" (also referred to as the "necessity of payment" doctrine), which authorizes a bankruptcy court to permit payment of pre-petition claims where such payment is essential to the continued operation of the debtor's business and the preservation of estate value.
III. BACKGROUND
A. General Background of the Debtor
12. Greenfield Agricultural Partners LLC is an Iowa limited liability company with Employer Identification Number 42-8837291. The Debtor's registered agent is Capitol Registered Agents Inc., located at 400 E. Court Avenue, Suite 200, Des Moines, Iowa 50309. The Debtor was organized under the laws of the State of Iowa and has been engaged in the manufacture and distribution of specialty agricultural chemicals for over fifteen years.
13. The Debtor's management team consists of the following individuals:
• Derek Calloway — Chief Executive Officer and Manager
• Patricia Langford — Chief Financial Officer
• Russell Teague — Chief Operating Officer
• Monica Huang — General Counsel and Secretary
• James Delacroix — Vice President, Treasury and Capital Markets
14. The Debtor manufactures and distributes a broad portfolio of specialty agricultural chemicals, including herbicides, fungicides, adjuvants, and seed treatments. The Debtor's products serve row-crop farmers, specialty-crop growers, and commercial applicators across the Midwest and Mid-South regions. The Debtor's flagship product, ClearGuard XR herbicide, is a post-emergence herbicide used in corn and soybean applications. ClearGuard XR accounted for approximately 28% of the Debtor's total revenue in fiscal year 2024 and is the Debtor's most recognized and commercially significant product.
15. The Debtor's manufacturing operations are conducted at three plants, each of which requires continuous operation during peak season:
(a) Cedar Falls, Iowa — Located at 1400 Prairie Ridge Drive, Cedar Falls, Iowa 50613, this facility serves as the Debtor's corporate headquarters and primary manufacturing plant. The Cedar Falls plant is the largest of the Debtor's three facilities and produces the majority of the Debtor's herbicide and fungicide product lines, including ClearGuard XR.
(b) Decatur, Illinois — Located at 2200 Industrial Boulevard, Decatur, Illinois 62521, this facility produces adjuvants, seed treatments, and certain specialty formulations. The Decatur plant also serves as a secondary production facility for certain herbicide products during periods of peak demand.
(c) Jonesboro, Arkansas — Located at 815 County Road 740, Jonesboro, Arkansas 72401, this facility primarily produces products for the Mid-South market, including rice herbicides, cotton defoliants, and specialty fungicides.
16. In addition to its three manufacturing plants, the Debtor operates fourteen regional distribution centers strategically located across the Midwest and Mid-South to provide timely delivery to its customer base. These distribution centers serve as the critical logistical link between the Debtor's manufacturing facilities and its end customers, and their continued operation is essential to the Debtor's ability to fulfill orders during peak season.
17. The Debtor also operates a 640-acre research and development farm located at 4500 University Boulevard, Ames, Iowa 50010. The Ames R&D farm supports ongoing product development, efficacy testing, and regulatory field trials. The R&D farm plays a key role in the Debtor's efforts to develop next-generation products and to maintain the EPA registrations necessary for continued commercialization of existing products.
18. As of the Petition Date, the Debtor employs approximately 2,300 individuals across its manufacturing plants, distribution centers, R&D farm, and corporate offices. The Debtor's workforce includes a substantial number of skilled chemical engineers, plant operators, regulatory scientists, and logistics professionals who would be difficult to replace if lost.
B. Pre-Petition Capital Structure
19. As of the Petition Date, the Debtor's capital structure consists of the following funded indebtedness:
(a) First Lien Term Loan. The Debtor is the borrower under a first lien term loan (the "First Lien Term Loan") in the original principal amount of $325,000,000, of which approximately $310,000,000 remains outstanding as of the Petition Date. Prairie State Bank, N.A. serves as administrative agent. The First Lien Term Loan bears interest at a rate of SOFR plus 450 basis points, matures in November 2026, and is secured by a first-priority lien on substantially all of the Debtor's assets (other than receivables and inventory, which are subject to the split-collateral arrangement described below). The First Lien Term Loan was originally closed in November 2021.
(b) ABL Revolving Credit Facility. The Debtor is the borrower under an asset-based revolving credit facility (the "ABL Revolver") with total commitments of $95,000,000, of which approximately $72,300,000 is drawn as of the Petition Date. Prairie State Bank, N.A. serves as administrative agent, with Hawthorn National Bank and Northland Savings Bank, F.S.B. as participating lenders. The ABL Revolver bears interest at a rate of SOFR plus 275 basis points, matures in May 2026, and is secured by a first-priority lien on the Debtor's receivables and inventory pursuant to a split-collateral intercreditor arrangement with the First Lien Term Loan lenders. The ABL Revolver was originally closed in March 2023.
(c) Senior Unsecured Notes. The Debtor is the issuer of $84,200,000 in aggregate principal amount of 9.50% Senior Unsecured Notes due March 2027 (the "Senior Unsecured Notes"). Meridian Trust Company serves as indenture trustee. The Senior Unsecured Notes are unsecured obligations of the Debtor and were issued in March 2024.
(d) Trade and Other Unsecured Claims. In addition to the Senior Unsecured Notes, the Debtor estimates that it has approximately $22,700,000 in trade and other unsecured claims outstanding as of the Petition Date.
20. In the aggregate, the Debtor's total funded indebtedness and trade obligations amount to approximately $489,200,000 as of the Petition Date.
C. Events Leading to the Chapter 11 Filing
21. The Debtor's financial difficulties are attributable to a confluence of adverse factors that materialized during fiscal year 2024 and continued into early fiscal year 2025. For the fiscal year ended December 31, 2024, the Debtor reported revenue of $612,400,000 and adjusted EBITDA of $38,700,000. While the Debtor's revenue base remained substantial, the Debtor's profitability declined significantly compared to prior periods due to the following factors:
(a) Severe Drought Conditions. The 2024 growing season was marked by severe drought conditions across significant portions of the Midwest and Mid-South, particularly in Iowa, Illinois, and Missouri. These drought conditions reduced crop acreage treated with the Debtor's products and depressed overall demand for agricultural chemicals.
(b) Depressed Commodity Pricing. Commodity prices for corn, soybeans, and other major row crops declined materially during 2024, reducing farm profitability and, in turn, reducing farmer spending on crop protection products. Many of the Debtor's customers deferred purchases or reduced order volumes.
(c) Delayed EPA Re-Registration of ClearGuard XR. The Debtor's flagship herbicide product, ClearGuard XR, was subject to a periodic re-registration review by the U.S. Environmental Protection Agency. The EPA's review process experienced significant delays, creating uncertainty among the Debtor's customers and distributors regarding the continued availability of ClearGuard XR. While the Debtor's existing registration remained valid, the prolonged uncertainty suppressed sales and led certain customers to trial competing products.
22. As a result of the Debtor's reduced profitability, the Debtor breached the Total Net Leverage Ratio covenant under the First Lien Term Loan as of December 31, 2024. The covenant required that the Debtor's Total Net Leverage Ratio not exceed 6.50x. The Debtor's actual ratio as of the testing date was 9.82x, calculated as follows: total funded secured debt of $382,300,000 ($310,000,000 First Lien Term Loan plus $72,300,000 ABL Revolver), less $11,800,000 cash on hand, yielding net debt of $370,500,000, divided by last-twelve-months adjusted EBITDA of approximately $37,700,000.
23. On January 31, 2025, the Debtor and the first lien lenders entered into a forbearance agreement (the "Forbearance Agreement") pursuant to which the first lien lenders agreed to forbear from exercising remedies in respect of the December 31, 2024 covenant breach. The Forbearance Agreement expired on May 1, 2025, and was not extended.
24. Separately, on March 15, 2025, the Debtor failed to make its semi-annual interest payment on the Senior Unsecured Notes in full. Of the $3,999,500 due, the Debtor paid only $318,250, leaving a shortfall of $3,681,250. The thirty-day grace period under the indenture expired on April 14, 2025, at which point an Event of Default under the indenture occurred.
25. With the Forbearance Agreement expired, an Event of Default outstanding under the Senior Unsecured Notes indenture, and limited liquidity ($11,800,000 in cash on hand as of the Petition Date), the Debtor determined, in consultation with its advisors, that a filing for relief under Chapter 11 was necessary to preserve the value of the Debtor's business, maintain its operations during peak season, and pursue a restructuring or sale for the benefit of all stakeholders.
26. The Debtor estimates the enterprise value of its business at approximately $280,000,000 to $340,000,000, based on preliminary analyses conducted by the Debtor's financial advisor, Claridge Advisory Group LLC.
D. The DIP Facility
27. Contemporaneously with the filing of this Motion, the Debtor has filed a separate motion (the "DIP Motion") seeking approval of a $175,000,000 senior secured superpriority debtor-in-possession revolving credit facility (the "DIP Facility"). The DIP Facility is provided by a syndicate of lenders consisting of Ironclad Capital Partners LP ($100,000,000 commitment), Ridgeline Opportunity Fund III LP ($50,000,000 commitment), and Bramblewood Credit Advisors LLC ($25,000,000 commitment). Ironclad Capital Partners LP serves as Administrative Agent, and Meridian Trust Company serves as Collateral Agent.
28. The Debtor expects the Court to enter an interim order approving the DIP Facility (the "Interim DIP Order") at a hearing currently targeted for May 22, 2025. Upon entry of the Interim DIP Order, the Debtor will have access to $80,000,000 in interim DIP financing availability, in addition to its $11,800,000 in cash on hand.
29. The DIP budget, which covers the thirteen-week period from May 15, 2025 through August 13, 2025, expressly contemplates the critical vendor payments sought by this Motion. The DIP Lenders have reviewed and approved the inclusion of these payments in the DIP budget. The Debtor's thirteen-week cash flow projection shows ending cash of approximately $56,750,000 at the conclusion of the budget period, well above the $15,000,000 minimum liquidity covenant under the DIP Facility. The critical vendor payments sought herein will not impair the Debtor's ability to comply with the financial covenants or operating requirements of the DIP Facility.
IV. THE CRITICAL VENDORS AND ESSENTIAL SERVICE PROVIDERS
A. Nature of the Critical Vendor Relationships
30. The Debtor's manufacturing operations are fundamentally dependent on a continuous and reliable supply of specialty chemical raw materials. These raw materials include, among other things, active ingredients (both proprietary and generic), surfactants, solvents, emulsifiers, inert carriers, and proprietary adjuvant compounds. Each of these inputs must meet rigorous quality specifications, and many are subject to regulatory requirements imposed by the EPA and state environmental and agricultural agencies.
31. Many of the Debtor's critical raw materials are sourced from a limited number of qualified suppliers. The agricultural chemicals industry is characterized by a high degree of supplier concentration for certain specialty inputs. Several of the Debtor's key suppliers hold proprietary formulations for active ingredients or intermediates that cannot be readily obtained from alternative sources. Others have undergone extensive EPA-required supplier qualification processes — a prerequisite to the inclusion of their materials in the Debtor's registered products. Certain suppliers are, as a practical matter, sole-source providers for particular inputs used in the Debtor's formulations.
32. Replacing any of these critical suppliers would be an extraordinarily time-consuming and costly process. A new supplier of a regulated active ingredient or intermediate would need to undergo the EPA's supplier qualification and registration process, which typically requires six to eighteen months — and in some cases longer — from initiation to completion. During this period, the Debtor would be unable to manufacture products requiring the affected input. Given that the DIP budget period covers only thirteen weeks and corresponds to the height of peak season, any interruption in supply during this period could not be remedied through supplier substitution.
33. The criticality of the current period cannot be overstated. Peak season — the second and third quarters of the calendar year — is currently underway. The Debtor's thirteen-week DIP budget projects total operating receipts of $129,600,000, with the bulk of receipts concentrated in Weeks 9 through 13 (approximately $49,800,000) as summer-season sales are billed and collected. These projected receipts are the foundation of the Debtor's liquidity forecast and its ability to fund operations, service the DIP Facility, and ultimately emerge from Chapter 11 as a viable going concern. Any disruption to manufacturing during this critical window would result in lost sales that cannot be recovered, as the agricultural application season is defined by narrow biological and climatic windows.
B. The Top Five Chemical Raw Material Suppliers
34. The Debtor has identified five chemical raw material suppliers (the "Top Five Suppliers") that are collectively owed approximately $9,400,000 in pre-petition trade payables. The Top Five Suppliers provide essential inputs for the Debtor's core product lines, including ClearGuard XR and other herbicide, fungicide, and seed treatment formulations. The specific identities of the Top Five Suppliers, together with the nature and amounts of the goods they supply and the pre-petition amounts owed to each, are set forth on the Confidential Schedule of Critical Vendors attached hereto as Exhibit B, which is being filed under seal to protect competitively sensitive supply chain information.
35. Several of the Top Five Suppliers have already communicated — either directly to the Debtor's management or through their legal counsel — that they will cease shipments absent payment of their pre-petition balances. Others have indicated that they will agree to continue supplying the Debtor only on cash-in-advance or cash-on-delivery terms, which would dramatically increase the Debtor's working capital requirements during the very period when liquidity is most constrained. In either case, the practical effect would be a disruption to the Debtor's ability to source the raw materials needed for continuous manufacturing.
36. The Debtor, in the exercise of its business judgment and in consultation with its management team, its restructuring advisor (Claridge Advisory Group LLC), and its counsel (Calderwood & Harkness LLP), has identified the Top Five Suppliers as "Critical Vendors" within the meaning of the doctrine of necessity. Each of these suppliers satisfies the criteria for critical vendor treatment:
(i) The goods provided by each supplier are essential to the Debtor's continued manufacturing operations. Without these inputs, the Debtor cannot produce its core product lines.
(ii) The suppliers cannot be replaced without significant cost, delay, or disruption. As discussed above, the EPA-required supplier qualification process for regulated inputs takes six to eighteen months, far longer than the DIP budget period.
(iii) The suppliers have significant leverage to refuse to continue doing business with the Debtor or to impose materially worse terms. Several have already indicated their intention to do so.
(iv) Payment of their pre-petition claims is necessary to preserve going-concern value for all stakeholders. The cost of the critical vendor payments ($9,400,000 in the aggregate for the Top Five Suppliers) is modest compared to the potential loss of seasonal revenue and enterprise value that would result from supply chain disruption.
C. Norris Industrial Services LLC — Cedar Falls Plant Compressor Overhaul
37. In the first quarter of 2025, the Debtor's Cedar Falls manufacturing plant — its primary and largest production facility — underwent a major compressor overhaul. The compressor systems at the Cedar Falls plant are integral to the chemical processing operations conducted at that facility, including the production of ClearGuard XR and other herbicide and fungicide products. The compressor overhaul was performed by Norris Industrial Services LLC ("Norris"), an Iowa limited liability company with specialized expertise in the particular high-pressure compressor systems installed at the Cedar Falls plant.
38. The total cost of the compressor overhaul was $4,200,000. Of this amount, $2,600,000 has been paid by the Debtor. The remaining $1,600,000 was outstanding as of the Petition Date and constitutes a pre-petition trade payable.
39. Norris has communicated to the Debtor, through its principal, that it will not perform warranty work, ongoing maintenance, or future emergency repairs on the Cedar Falls compressor systems absent payment of the outstanding $1,600,000 balance. Norris's refusal to provide warranty and maintenance support poses a serious and imminent risk to the Debtor's operations. The compressor systems are complex, high-pressure industrial equipment that requires regular maintenance and is subject to operational risks including mechanical failure, seal degradation, and control system malfunctions. If a compressor failure were to occur during peak season without available warranty and maintenance support from Norris, the Cedar Falls plant could be forced to shut down for an extended period.
40. Norris possesses specialized expertise in the particular compressor systems installed at the Cedar Falls plant. These systems were originally designed and installed by a manufacturer that has since exited the North American market, making Norris one of a very small number of service providers with the knowledge and experience necessary to maintain and repair this equipment. Qualifying an alternative service provider would require weeks of training, equipment familiarization, and certification — a process that cannot be completed during peak season without unacceptable risk to plant operations.
41. For these reasons, the Debtor seeks to include the $1,600,000 Norris claim in the critical vendor pool authorized for payment under this Motion.
D. Other Essential Service Providers
42. In addition to the Top Five Suppliers and Norris, the Debtor has identified a limited number of other essential service providers whose pre-petition claims should be authorized for payment as part of the critical vendor program. These service providers include, among others:
(a) Logistics Providers. The Debtor's distribution network depends on a small number of specialized logistics providers that operate dedicated fleet assets and maintain temperature-controlled and hazmat-certified transportation capabilities essential to the movement of agricultural chemicals from the Debtor's manufacturing plants to its fourteen regional distribution centers and, in certain cases, directly to end customers.
(b) Specialized Laboratory Testing Services. The Debtor relies on third-party laboratories for quality assurance testing, batch certification, and regulatory compliance testing. These laboratories hold EPA Good Laboratory Practice (GLP) certifications and have established testing protocols specific to the Debtor's product formulations.
(c) EPA-Mandated Compliance Service Providers. The Debtor engages certain service providers to conduct environmental monitoring, emissions testing, waste handling, and other compliance functions mandated by the EPA and state regulatory authorities. Disruption of these services could jeopardize the Debtor's regulatory standing and manufacturing permits.
43. The aggregate amount of pre-petition claims owed to these other essential service providers is estimated at approximately $1,000,000. The identities and specific amounts are set forth on the Confidential Schedule of Critical Vendors attached as Exhibit B.
E. Aggregate Cap and Procedures
44. The total authorization sought by this Motion is not to exceed $12,000,000 in the aggregate, allocated approximately as follows:
45. The $12,000,000 cap provides a reasonable cushion above the currently identified critical vendor claims to address additional essential vendor relationships as they may be identified in the ordinary course during the DIP budget period. The Debtor does not anticipate exceeding this cap but seeks the flexibility to address unforeseen supply chain needs as they arise.
46. To ensure that the estate receives value in exchange for critical vendor payments and to protect against abuse, the Debtor proposes to implement the following procedures (the "Critical Vendor Procedures"):
(a) Critical Vendor Agreement. As a condition to receiving any payment under this Motion, each critical vendor will be required to execute a "Critical Vendor Agreement" substantially in the form to be approved by the Court. The Critical Vendor Agreement will include, at a minimum, the following provisions:
(1) The vendor agrees to continue supplying the Debtor with goods or services on customary trade terms, or terms no less favorable than those in effect during the twelve-month period prior to the Petition Date, for the duration of the Chapter 11 case or such shorter period as the Court may specify.
(2) If the vendor subsequently refuses to supply the Debtor on such terms or otherwise breaches the Critical Vendor Agreement, the payment made to the vendor may be subject to disgorgement and recovery by the Debtor's estate.
(3) The vendor waives any right of setoff or recoupment with respect to pre-petition claims against the Debtor's estate.
(b) Ledger and Reporting. The Debtor will maintain a detailed ledger of all critical vendor payments made pursuant to this Motion, including the identity of each vendor, the amount paid, the date of payment, and the nature of the goods or services provided. The Debtor will provide periodic reports regarding critical vendor payments to the DIP Administrative Agent (Ironclad Capital Partners LP) and, upon appointment, to the Official Committee of Unsecured Creditors and its counsel (Archer Grayson & Cole LLP).
(c) Individual Vendor Cap. No single vendor shall receive more than $3,000,000 in critical vendor payments without further order of the Court.
(d) Financial Advisor Oversight. The Debtor's financial advisor, Claridge Advisory Group LLC (Nolan Ashworth, Managing Director), will assist the Debtor in monitoring critical vendor payments against the DIP budget and ensuring compliance with the Critical Vendor Procedures.
V. LEGAL BASIS FOR RELIEF
A. Section 363(b) of the Bankruptcy Code — Sound Business Judgment
47. Section 363(b)(1) of the Bankruptcy Code provides that "[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate." 11 U.S.C. § 363(b)(1). Although the payment of pre-petition claims is not ordinarily authorized in a Chapter 11 case — where the general rule is that pre-petition claims are to be addressed through the plan process — courts have recognized that a debtor-in-possession may use estate property to pay pre-petition claims outside the ordinary course of business where a sound business justification exists.
48. The "business judgment" standard governs the court's review of a proposed transaction under section 363(b). Under this standard, the court should approve a transaction if the debtor demonstrates a sound business purpose and the proposed action is undertaken in good faith. The court need not find that the proposed action is the best possible course of action or the only available alternative; rather, the court need only determine that the debtor has exercised reasonable business judgment in concluding that the proposed action will benefit the estate. See In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983); In re Chrysler LLC, 576 F.3d 108, 118 (2d Cir. 2009).
49. Here, the Debtor has a compelling and well-documented business purpose for the critical vendor payments: preserving the Debtor's manufacturing operations and supply chain during the peak season, which is the single most important period for the Debtor's revenue generation and, accordingly, for the preservation and maximization of estate value. The Debtor's management — including Derek Calloway (CEO), Russell Teague (COO), and Patricia Langford (CFO) — together with the Debtor's restructuring advisor, Claridge Advisory Group LLC, and its legal counsel, Calderwood & Harkness LLP, have exercised careful business judgment in identifying the critical vendors, determining the amounts necessary for payment, and designing the Critical Vendor Procedures to protect the estate's interests. The proposed payments are reasonable in amount, targeted in scope, and directly tied to the preservation of the Debtor's going-concern value.
B. Section 105(a) of the Bankruptcy Code — The Doctrine of Necessity
50. Section 105(a) of the Bankruptcy Code provides that "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. § 105(a). Courts have long recognized that section 105(a), together with section 363(b), provides the statutory foundation for the "doctrine of necessity" (also referred to as the "necessity of payment" doctrine), which permits a bankruptcy court to authorize payment of pre-petition claims where such payment is essential to the continued operation of the debtor's business.
51. The doctrine of necessity traces its origins to the railroad receivership cases of the nineteenth and early twentieth centuries, in which courts authorized the payment of pre-receivership claims of suppliers and employees where necessary to keep the railroads operating. See Miltenberger v. Logansport, C. & S.W. Ry. Co., 106 U.S. 286, 311–12 (1882); In re Boston & Me. Corp., 634 F.2d 1359, 1382 (1st Cir. 1980). The doctrine has been widely adopted by modern bankruptcy courts and has been applied in Chapter 11 cases across a broad range of industries.
52. The Eighth Circuit and courts within this District have recognized the doctrine of necessity in appropriate circumstances. Courts generally require the debtor to demonstrate the following elements to justify payment of pre-petition claims under the doctrine of necessity:
(i) The vendor's goods or services are essential to the debtor's continued operations;
(ii) The vendor will cease doing business with the debtor absent payment of its pre-petition claim;
(iii) The debtor cannot obtain comparable goods or services from an alternative source on a timely basis and at a reasonable cost; and
(iv) Payment of the pre-petition claim will benefit the estate as a whole, not merely the individual vendor.
53. All four elements are satisfied here. As described in detail in Section IV of this Motion:
(i) Essential goods and services. The Top Five Suppliers provide the raw materials without which the Debtor's manufacturing plants cannot operate. Norris provides the maintenance and warranty support without which the Cedar Falls plant's compressor systems are at risk of failure. The other essential service providers furnish logistics, laboratory, and regulatory compliance services upon which the Debtor's operations depend.
(ii) Threat of cessation. Several of the Top Five Suppliers have already communicated their intention to cease shipments absent payment of pre-petition balances. Norris has expressly refused to perform warranty or maintenance work absent payment. Other essential service providers have indicated similar concerns.
(iii) No readily available alternatives. The Debtor's key raw material suppliers cannot be replaced within the DIP budget period due to EPA qualification requirements, proprietary formulations, and sole-source status. Norris possesses specialized expertise in the Cedar Falls compressor systems that cannot be duplicated by alternative service providers on the necessary timeline.
(iv) Estate-wide benefit. The critical vendor payments will preserve the Debtor's ability to manufacture and sell products during peak season, generating the revenue needed to fund operations, service the DIP Facility, and maintain the going-concern value upon which all stakeholders — including general unsecured creditors — depend.
C. Adequate Assurance of Continued Supply and Estate Benefit
54. The Critical Vendor Agreement requirement ensures that the estate receives tangible value in exchange for each critical vendor payment — namely, the vendor's binding commitment to continue supplying the Debtor on customary trade terms for the duration of the Chapter 11 case. This quid pro quo distinguishes the critical vendor program from a mere preferential payment: the estate is not simply paying pre-petition claims, but rather securing the ongoing supply relationships that are essential to the generation of post-petition value.
55. The disgorgement provision in the Critical Vendor Agreement provides further protection. If a vendor accepts payment but subsequently refuses to supply the Debtor on customary terms or otherwise breaches the Critical Vendor Agreement, the payment may be recovered by the estate. This provision aligns the vendor's incentives with the estate's interests and deters opportunistic behavior.
56. The $12,000,000 cap limits the total exposure of the estate and is modest relative to the Debtor's total pre-petition trade payables of approximately $22,700,000. The critical vendor payments represent approximately 52.9% of total trade claims. The individual vendor cap of $3,000,000 provides an additional safeguard against disproportionate payments to any single vendor.
57. The critical vendor payments are contemplated in the DIP budget approved (or to be approved) by the DIP Lenders and the Court. The payments are within the Debtor's projected liquidity and will not impair the Debtor's ability to satisfy its obligations under the DIP Facility or to maintain the $15,000,000 minimum liquidity covenant. The Debtor's financial advisor, Claridge Advisory Group LLC, has reviewed the projected cash flows and confirmed that the critical vendor payments are sustainable within the Debtor's overall financial plan for the DIP budget period.
VI. NO ADVERSE IMPACT ON UNSECURED CREDITORS
58. The Debtor recognizes that the payment of pre-petition claims to critical vendors creates a preference for those vendors relative to other unsecured creditors who will not receive payment of their pre-petition claims during the pendency of the Chapter 11 case. The Debtor takes this concern seriously and has endeavored to limit the scope and amount of the critical vendor program to those vendors whose continued engagement is truly essential to the Debtor's operations.
59. The Debtor respectfully submits, however, that the benefits to the estate as a whole — including to the general body of unsecured creditors — far outweigh any prejudice resulting from the differential treatment of critical vendors. The analysis below demonstrates this point.
60. The Debtor's estimated enterprise value is $280,000,000 to $340,000,000. The Debtor's total funded secured debt — consisting of $310,000,000 under the First Lien Term Loan and $72,300,000 under the ABL Revolver — is $382,300,000. Even at the high end of the enterprise value range, the secured creditors face a significant deficiency. Accordingly, unsecured creditors — including the holders of the $84,200,000 Senior Unsecured Notes and the approximately $22,700,000 in trade claims — are deeply out of the money and will receive meaningful recoveries only to the extent that the Debtor's going-concern value is maximized through a successful reorganization or section 363 sale process.
61. Disruption to the Debtor's manufacturing operations during peak season would reduce the enterprise value available for distribution to all stakeholders, including unsecured creditors. Lost production during peak season cannot be recovered: the agricultural application season is defined by immutable biological and climatic windows, and customers who cannot obtain the Debtor's products during the spring and summer will turn to competitors. The resulting loss of revenue, customer relationships, and market position would diminish the Debtor's enterprise value and, in turn, reduce the value available for distribution to all creditor constituencies.
62. In contrast, the critical vendor payments — totaling a maximum of $12,000,000 — are designed to ensure uninterrupted manufacturing and distribution during the most commercially important period of the year. The Debtor's DIP budget projects $129,600,000 in operating receipts during the thirteen-week budget period. Protecting these receipts by investing $12,000,000 in critical vendor payments is, in the Debtor's business judgment, a sound and reasonable allocation of estate resources.
63. Upon appointment of the Official Committee of Unsecured Creditors, the Debtor will provide the Committee and its counsel, Archer Grayson & Cole LLP, with full information regarding the critical vendor program, including the identities of the critical vendors, the amounts paid, and the terms of each Critical Vendor Agreement. The Debtor welcomes the Committee's input and oversight with respect to the ongoing administration of the critical vendor program.
VII. WAIVER OF BANKRUPTCY RULE 6004(a) NOTICE AND 14-DAY STAY
64. The Debtor respectfully requests a waiver of the fourteen-day stay period imposed by Bankruptcy Rule 6004(h), to the extent applicable to the relief sought herein. Bankruptcy Rule 6004(h) provides that an order authorizing the use, sale, or lease of property is stayed for fourteen days after entry unless the court orders otherwise. The Debtor submits that cause exists for waiver of this stay because:
(a) Peak season is currently underway, and the Debtor's manufacturing plants require continuous operation. Any delay in the authorization of critical vendor payments increases the risk of supply chain disruption and plant shutdowns.
(b) Several critical vendors have indicated that they will halt shipments imminently absent assurance of payment. Each day of delay without authority to make critical vendor payments increases the likelihood that one or more of these suppliers will cease deliveries, potentially triggering a cascade of production disruptions.
(c) Raw material deliveries to the Debtor's manufacturing plants occur on a daily or weekly basis. A fourteen-day stay would create an unacceptable gap in the Debtor's ability to make the payments necessary to ensure continued deliveries during this critical period.
65. The Debtor also requests that the Court authorize the relief sought herein on shortened notice given the emergency nature of the situation. The Debtor has provided notice to the parties listed in Section VIII below and submits that such notice is sufficient under the circumstances.
VIII. NOTICE
66. Notice of this Motion has been provided to the following parties:
(a) The Office of the United States Trustee for Region 12, Northern District of Iowa;
(b) Prairie State Bank, N.A., as administrative agent under the First Lien Term Loan and the ABL Revolver, attention: Thomas Whitaker, Senior Vice President, Loan Workout Group, 500 Main Street, Suite 1200, Kansas City, Missouri 64105, and its counsel (to be identified upon retention);
(c) Ironclad Capital Partners LP, as DIP Administrative Agent, 600 Lexington Avenue, 34th Floor, New York, New York 10022, and all DIP Lenders — through their counsel, Harmon & Keach LLP (Richard Yeung, Partner), 51 West 52nd Street, New York, New York 10019;
(d) Meridian Trust Company, as Collateral Agent under the DIP Facility and as indenture trustee for the Senior Unsecured Notes, attention: Robert Fennimore, Vice President, Corporate Trust, 101 Park Avenue, 20th Floor, New York, New York 10178;
(e) The Debtor's thirty (30) largest unsecured creditors, as identified in the list filed with the Debtor's petition; and
(f) All parties who have filed a request for notice in this case pursuant to Bankruptcy Rule 2002.
67. The Debtor submits that such notice is sufficient under the circumstances and that no other or further notice is required.
IX. CONCLUSION AND PRAYER FOR RELIEF
WHEREFORE, the Debtor respectfully requests that this Court enter an order, substantially in the form attached hereto as Exhibit A:
(a) Authorizing, but not directing, the Debtor to pay pre-petition claims of critical vendors and essential service providers in an aggregate amount not to exceed $12,000,000, subject to the Critical Vendor Procedures described herein;
(b) Authorizing the Debtor to condition such payments on each vendor's execution of a Critical Vendor Agreement, substantially in the form to be approved by the Court, requiring continued supply on customary trade terms and including a disgorgement provision;
(c) Authorizing applicable banks and financial institutions to honor and process checks and electronic fund transfers issued or initiated by the Debtor in connection with the foregoing;
(d) Waiving the fourteen-day stay imposed by Bankruptcy Rule 6004(h);
(e) Granting such other and further relief as the Court deems just and proper.
Dated: May 15, 2025
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Nathaniel Bower (admitted pro hac vice pending) Colette Whitman (admitted pro hac vice pending) Gabrielle Moss (admitted pro hac vice pending) Amy Chesterton (admitted pro hac vice pending)
450 Park Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Iowa Office: 801 Grand Avenue, Suite 3300 Des Moines, Iowa 50309 Telephone: (515) 288-7600 Facsimile: (515) 288-7601
Counsel for the Debtor and Debtor-in-Possession
EXHIBIT A
PROPOSED ORDER AUTHORIZING PAYMENT OF CRITICAL VENDOR CLAIMS
UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION
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In re:
GREENFIELD AGRICULTURAL PARTNERS LLC,
Debtor.
EIN: 42-8837291
Case No. 25-01147
Chapter 11
Hon. Margaret R. Dunleavy U.S. Bankruptcy Judge
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ORDER AUTHORIZING, BUT NOT DIRECTING, THE DEBTOR TO PAY PRE-PETITION CLAIMS OF CRITICAL VENDORS AND ESSENTIAL SERVICE PROVIDERS PURSUANT TO 11 U.S.C. §§ 105(a) AND 363(b)
Upon the Emergency Motion (Dkt. No. _) (the "Motion") filed by Greenfield Agricultural Partners LLC, as debtor and debtor-in-possession (the "Debtor"), by and through its counsel, Calderwood & Harkness LLP, for entry of an order authorizing, but not directing, the Debtor to pay pre-petition claims of critical vendors and essential service providers in an aggregate amount not to exceed $12,000,000, pursuant to sections 105(a) and 363(b) of Title 11 of the United States Code (the "Bankruptcy Code"); and the Court having reviewed the Motion, any objections thereto, and the record in this case; and the Court finding that (a) good and sufficient notice of the Motion was provided to all required parties; (b) no further notice is required; (c) the legal and factual bases set forth in the Motion establish sufficient cause for the relief requested; (d) the relief requested is in the best interests of the Debtor, its estate, its creditors, and other parties in interest; and (e) the Debtor has demonstrated sound business justification for the critical vendor payments and has satisfied the requirements of the doctrine of necessity; and after due deliberation and for good cause shown;
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Motion is GRANTED as set forth herein.
2. Authorization to Pay Critical Vendor Claims. The Debtor is authorized, but not directed, to pay pre-petition claims of critical vendors and essential service providers identified in the exercise of the Debtor's business judgment, in an aggregate amount not to exceed Twelve Million Dollars ($12,000,000) (the "Critical Vendor Cap"). The Debtor shall exercise its discretion in determining the timing, amount, and manner of such payments, subject to the procedures and limitations set forth herein.
3. Critical Vendor Agreement Required. As a condition to receipt of any payment pursuant to this Order, each critical vendor or essential service provider shall execute a Critical Vendor Agreement substantially in the form attached to the Motion, which shall require, at a minimum, that (a) the vendor agree to continue supplying the Debtor with goods or services on customary trade terms, or on terms no less favorable than those in effect during the twelve-month period prior to the Petition Date, for the duration of the Chapter 11 case or such shorter period as this Court may specify; (b) the vendor agree that if it subsequently refuses to supply the Debtor on such terms or otherwise breaches the Critical Vendor Agreement, the payment received by the vendor under this Order may be subject to disgorgement and recovery by the Debtor's estate; and (c) the vendor waive any right of setoff or recoupment with respect to pre-petition claims against the Debtor's estate.
4. Individual Vendor Cap. No individual vendor or essential service provider shall receive more than Three Million Dollars ($3,000,000) in aggregate critical vendor payments pursuant to this Order without further order of this Court upon motion by the Debtor and notice to the parties entitled to notice under this Order.
5. Ledger and Reporting. The Debtor shall maintain a detailed ledger of all critical vendor payments made pursuant to this Order, including the identity of each vendor, the amount paid, the date of payment, and the nature of the goods or services provided. The Debtor shall provide copies of such ledger, on a periodic basis as reasonably requested, to (a) Ironclad Capital Partners LP, as DIP Administrative Agent, and (b) upon appointment, the Official Committee of Unsecured Creditors and its counsel, Archer Grayson & Cole LLP.
6. Authorization to Issue Payments. The Debtor is authorized to issue checks and initiate electronic fund transfers in furtherance of this Order. All applicable banks, financial institutions, and other payment processors are authorized and directed to receive, process, honor, and pay any and all checks, wire transfers, ACH transactions, or other forms of payment drawn on the Debtor's accounts, to the extent such payments are issued or initiated in connection with the critical vendor payments authorized by this Order, whether such checks or electronic transfers were presented prior to or after the date of this Order; provided, that sufficient funds are on deposit in the applicable accounts to cover such payments.
7. No Determination of Claims. Nothing in this Order shall constitute a finding or determination as to the validity, priority, amount, or secured or unsecured status of any particular pre-petition claim against the Debtor or the Debtor's estate. All claims remain subject to the claims resolution procedures established in this case.
8. Waiver of 14-Day Stay. The fourteen-day stay imposed by Rule 6004(h) of the Federal Rules of Bankruptcy Procedure is hereby waived, and this Order shall be effective immediately upon entry. The Debtor is authorized to take all actions necessary to implement the relief granted herein immediately upon entry of this Order.
9. Retention of Jurisdiction. This Court retains exclusive jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation, or enforcement of this Order, including without limitation any dispute regarding the terms of any Critical Vendor Agreement and any motion for disgorgement of payments made pursuant to this Order.
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________________________________________
HONORABLE MARGARET R. DUNLEAVY UNITED STATES BANKRUPTCY JUDGE
Dated: ______, 2025
EXHIBIT B
CONFIDENTIAL SCHEDULE OF CRITICAL VENDORS (FILED UNDER SEAL)
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NOTICE: This Exhibit B is filed under seal pursuant to the Debtor's request and any order of the Court authorizing such filing. This schedule contains competitively sensitive information regarding the Debtor's supply chain, including the identities of critical vendors, the nature and quantities of goods and services supplied, and the amounts owed. Unauthorized disclosure of the information contained herein could cause competitive harm to the Debtor and its estate.
This Confidential Schedule of Critical Vendors sets forth each critical vendor and essential service provider identified by the Debtor, the nature of goods or services supplied by each such vendor, the approximate pre-petition claim amount owed to each vendor, and the proposed maximum payment amount under the Debtor's Emergency Motion for Authority to Pay Pre-Petition Claims of Critical Vendors and Essential Service Providers.
Summary of Critical Vendor Categories:
The detailed, vendor-by-vendor schedule is attached hereto and incorporated herein by reference.
The detailed schedule is omitted from this filing for confidentiality purposes and has been submitted separately under seal to the Court, the Office of the United States Trustee, and the DIP Administrative Agent.