PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
INTERNAL MEMORANDUM
TO: File — Matter No. 1020-00005
FROM: Hannah Brinkley, Lead Associate
DATE: February 17, 2023
RE: Matter Closing Memorandum — Greenfield Agricultural Partners LLC v. Prairie Basin Grain Co. et al., Circuit Court of Cook County, Illinois, Case No. 2022-L-004831
STATUS: Closed — Terminated
This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of litigation. It is intended solely for the internal records of Calderwood & Harkness LLP and should not be disclosed to any third party without the express written authorization of the Responsible Partner.
I. Purpose
This memorandum documents the closure of Calderwood & Harkness LLP Matter No. 1020-00005 and serves as the permanent file closing record for the breach-of-contract collection action prosecuted on behalf of Greenfield Agricultural Partners LLC ("GAP") against Prairie Basin Grain Co. ("PBGC") and Darren K. Musgrave (collectively, "Defendants") in the Circuit Court of Cook County, Illinois, County Department, Law Division, Case No. 2022-L-004831. The memorandum provides a comprehensive account of the engagement, the parties, the underlying dispute, the procedural history, the final disposition of the matter, all preserved claims and open issues, billing information, a complete index of key documents maintained in the file, and document retention instructions applicable to this matter.
This matter is being closed following entry of the Order of Voluntary Dismissal Without Prejudice by the Honorable Patricia Delacroix on February 17, 2023. Although the Cook County litigation has been terminated, certain claims of the client remain pending or preserved, as described in detail in Section IX below. Accordingly, this memorandum should be read in conjunction with the separate advisories and correspondence provided to the client regarding those outstanding matters, and the file should be treated in accordance with the extended retention instructions set forth in Section XII.
II. Client Information
Client: Greenfield Agricultural Partners LLC
Entity Type: Delaware limited liability company; principal headquarters located at 1400 Grand Prairie Boulevard, Suite 800, Des Moines, Iowa 50309.
Nature of Business: GAP is a strategic, privately held company engaged in large-scale grain origination, commodity trading, agricultural chemicals, and crop input supply across the Midwest. GAP operates through several internal divisions, including its Grain Trading Division, which was the primary business unit involved in the transactions giving rise to this matter. GAP maintains grain storage, logistics, and merchandising operations in Iowa, Illinois, Indiana, Nebraska, and Minnesota and is a significant participant in the regional commodity markets.
Annual Revenue (FY 2021): Approximately $620 million.
Primary Client Contacts:
• Thomas R. Greenfield, Chairman and Chief Executive Officer
• Margaret A. Greenfield-Wu, President and Chief Operating Officer
• Caleb Jennings, Director of Grain Operations, GAP Grain Trading Division
Mr. Jennings served as the day-to-day client contact throughout the engagement and was the principal GAP representative with direct knowledge of the commercial relationship with PBGC, the delivery transactions, and the invoicing history. Mr. Greenfield and Ms. Greenfield-Wu were consulted on major strategic litigation decisions, including the decision to voluntarily dismiss the Cook County action following the appointment of a receiver over PBGC.
Illinois Registered Agent: Capitol Registered Agents Inc., 200 South Wacker Drive, Suite 3100, Chicago, Illinois 60606.
Client FEIN: 47-3821654.
Client's Auditor: Langford & Pryce CPAs LLP (Engagement Partner: Russell D. Langford, CPA), 700 Locust Street, Suite 500, Des Moines, Iowa 50309. The client's auditor was identified during initial intake to facilitate coordination regarding any potential impact of the outstanding receivables on GAP's financial reporting.
III. Adverse Parties
A. Prairie Basin Grain Co.
Entity Type: Illinois corporation.
Principal Office: 4520 Harvest Road, Champaign, Illinois 61820.
Illinois Registered Agent: Ridgeline Corporate Services LLC, 77 West Washington Street, Suite 1420, Chicago, Illinois 60602.
Nature of Business: PBGC was a regional grain elevator operator, off-taker, and merchandiser serving central Illinois. At the time the Off-Take Agreement was executed, PBGC operated six grain elevator facilities across Champaign, Macon, and Piatt Counties, Illinois. PBGC's business model centered on purchasing grain from producers and intermediaries (including GAP), storing it at its elevator facilities, and reselling it to end-users, processors, and export channels.
FEIN: 37-4295018.
Estimated Annual Revenue (FY 2021): Approximately $185 million.
Principals:
• Darren K. Musgrave — President, sole director, and 72% shareholder
• Lydia R. Musgrave — Secretary/Treasurer and 18% shareholder
• Victor P. Novotny — Vice President of Operations and 10% shareholder
Historical Auditor: Mercer Tidwell & Associates PC (Engagement Partner: Joan F. Tidwell, CPA), 112 West Church Street, Champaign, Illinois 61820.
Status at Matter Close: PBGC is currently in receivership. On December 12, 2022, the Circuit Court of Sangamon County, Illinois, entered an Order Appointing Receiver in Case No. 2022-CH-001247 (filed by Heartland Prairie Bank, N.A.), designating Gareth J. Whitmore (CPA, CIRA) of Whitmore Strauss Advisory LLC as receiver over all assets and operations of PBGC. As of the date of this memorandum, the receivership proceedings remain ongoing and no distribution plan has been proposed.
B. Darren K. Musgrave (Individual Defendant)
Residence: 1188 Windermere Lane, Champaign, Illinois 61822.
Role in Matter: Mr. Musgrave was named as an individual defendant in this action in his capacity as personal guarantor under the Musgrave Guaranty, which is attached as Exhibit D to the Off-Take Agreement. The Musgrave Guaranty is a limited personal guaranty of PBGC's payment obligations under the Off-Take Agreement, capped at $2,000,000. Mr. Musgrave also served as President, sole director, and controlling shareholder of PBGC, and was the principal point of contact for GAP in the underlying commercial relationship.
IV. Opposing Counsel
Firm: Bartlett, Reyes, Linley & Harkin LLP, 200 North LaSalle Street, Suite 2500, Chicago, Illinois 60601.
Lead Partner: Douglas M. Harkin.
Associate: Nadia C. Petrov.
Bartlett, Reyes, Linley & Harkin LLP represented both PBGC and Musgrave from the filing of the joint Answer and Affirmative Defenses on June 27, 2022, through the entry of the Court's order granting the firm's Motion to Withdraw on November 18, 2022. The firm's representation was terminated based on the Defendants' non-payment of legal fees, as stated in the Motion to Withdraw filed on November 4, 2022. Following the grant of the Motion to Withdraw, neither PBGC nor Musgrave obtained substitute counsel in the Cook County action. PBGC was unrepresented at the time of the receivership filing and through the dismissal of this action. As noted in Section VII.C below, the receiver retained separate counsel (Lockridge Payne LLP) for purposes of the Sangamon County receivership proceedings.
V. Calderwood & Harkness Engagement Team
The following firm personnel were assigned to this matter:
Engagement Letter Date: March 22, 2022. The engagement letter was executed by Thomas R. Greenfield on behalf of GAP. The engagement was a standard hourly-rate arrangement with no contingency component. The scope of engagement covered the investigation, pre-suit demand, prosecution, and resolution of claims arising from PBGC's non-payment of the invoices described herein. The engagement letter contained standard terms regarding billing, payment, file retention, and the firm's right to withdraw.
Fee Structure: Hourly, with monthly billing. All invoices were rendered on a monthly cycle and were subject to review and approval by Mr. Jennings and Ms. Greenfield-Wu. Billing rates reflected the firm's standard rates for the applicable fiscal year and were not subject to any discount or alternative fee arrangement.
VI. Summary of the Underlying Dispute
A. The Off-Take Agreement
The claims asserted in this action arose out of a Master Grain Purchase and Off-Take Agreement dated March 15, 2019 (the "Off-Take Agreement"), entered into between GAP, as Seller, and PBGC, as Buyer. The Off-Take Agreement established the framework for GAP's sale and delivery of specified quantities of grain commodities to PBGC over a five-year term commencing March 15, 2019 and expiring March 14, 2024.
The material terms of the Off-Take Agreement relevant to this matter are as follows:
Minimum Purchase Commitments. Under the Off-Take Agreement, PBGC agreed to purchase from GAP specified minimum quantities of grain on a forward-contract basis each contract year. Specifically, PBGC committed to purchase a minimum of 1,200,000 bushels per year of #2 Yellow Corn and a minimum of 600,000 bushels per year of #1 Yellow Soybeans.
Delivery. Grain was to be delivered by GAP to PBGC's elevator facilities located in Champaign, Macon, and Piatt Counties, Illinois. Delivery terms, scheduling, and logistics were governed by individual delivery orders issued pursuant to the framework established in the Off-Take Agreement.
Pricing. The purchase price for each delivery was determined by reference to the Chicago Board of Trade ("CBOT") nearby futures price at the time of delivery, adjusted by a negotiated quarterly basis differential set forth in Exhibit B to the Off-Take Agreement. The basis differential varied by commodity, delivery location, and quarter.
Payment Terms. Payment was due net thirty (30) days from the date of delivery and acceptance of the grain by PBGC at the designated elevator facility.
Late Payment Interest. Section 7.3 of the Off-Take Agreement provided that any amounts not paid when due would bear interest at the rate of 1.5% per month (18% per annum), compounding monthly, from the due date until paid in full.
Governing Law. The Off-Take Agreement was governed by the laws of the State of Illinois, without regard to conflict-of-laws principles.
Jurisdiction and Venue. Section 12.1 of the Off-Take Agreement provided for the exclusive jurisdiction of the courts of Cook County, Illinois, or the United States District Court for the Northern District of Illinois, Eastern Division.
Prevailing-Party Attorneys' Fees. Section 12.4 of the Off-Take Agreement provided that, in any action or proceeding arising out of or relating to the agreement, the prevailing party would be entitled to recover its reasonable attorneys' fees, costs, and expenses from the non-prevailing party.
Musgrave Guaranty. As a condition to GAP's entry into the Off-Take Agreement, Darren K. Musgrave executed a limited personal guaranty of PBGC's payment obligations, which was attached to the Off-Take Agreement as Exhibit D (the "Musgrave Guaranty"). The Musgrave Guaranty was absolute and unconditional but was subject to a maximum aggregate liability cap of $2,000,000.
B. The Unpaid Invoices
PBGC failed to pay five invoices for grain delivered and accepted by PBGC under the Off-Take Agreement during the period from September 2021 through January 2022. The details of these invoices are set forth in the table below:
Total Principal Outstanding: $4,870,050.00
Each of these invoices corresponded to a confirmed delivery of grain to one of PBGC's elevator facilities, with delivery accepted by PBGC personnel and documented by delivery receipts and weight tickets. At no point during this engagement did PBGC dispute the quantity, quality, or delivery of the grain covered by these invoices, and the authenticity and accuracy of each invoice were confirmed by PBGC's email correspondence and, subsequently, by the course of the litigation (PBGC's Answer did not deny receipt or acceptance of the grain).
C. PBGC's Financial Distress
The non-payment of the invoices described above was symptomatic of a broader financial collapse at PBGC that became increasingly apparent over the course of this engagement. The key events and contributing factors were as follows:
Elevator Fire (October 17, 2021). On October 17, 2021, a fire destroyed PBGC's Macon County elevator facility, located at 2200 County Road 1400 East, Decatur, Illinois 62521. The estimated loss attributable to the fire was approximately $3.2 million. PBGC's property insurance policy was underwritten by Triton Mutual Insurance Co. However, Triton disputed coverage on the grounds that PBGC had allowed a lapse in premium payments prior to the date of the fire. As of the date of this memorandum, coverage litigation between PBGC (now through its receiver) and Triton Mutual Insurance Co. remains pending in a separate proceeding. The potential recovery of insurance proceeds is a significant variable in the receivership and may affect the ultimate recovery available to unsecured creditors, including GAP.
Failed Hedging Strategy (Q4 2021). During the fourth quarter of 2021, PBGC experienced significant losses on short corn futures positions. The failed hedging strategy resulted in estimated mark-to-market losses of approximately $6.8 million. These losses severely impaired PBGC's liquidity and working capital position.
Cessation of Trade Payments (January 2022). By January 2022, PBGC had ceased paying trade creditors generally, including GAP. Multiple other grain suppliers and service providers were similarly affected.
Bank Default (April 2022). On or about April 2022, Heartland Prairie Bank, N.A. (300 East Main Street, Decatur, Illinois 62521; relationship manager Kenneth W. Aldrich, SVP, Agribusiness Lending) declared PBGC in default under a Revolving Credit and Term Loan Agreement dated June 1, 2018 (aggregate commitment of $45 million). The outstanding balance under the bank facility at the time of default was approximately $31.4 million. Heartland Prairie Bank held a senior perfected security interest (under UCC Article 9) in substantially all of PBGC's assets.
Insolvency (November 2022). By November 2022, PBGC's total reported liabilities were estimated at $58–62 million, while its total assets were estimated at $35–40 million, representing a significant balance-sheet insolvency. The disparity between liabilities and assets, together with the priority of Heartland Prairie Bank's secured claim, indicated that unsecured creditors such as GAP would face a substantial shortfall in any liquidation or distribution scenario.
VII. Chronological Matter History
A. Pre-Litigation Phase (January–May 2022)
The following is a chronological summary of the pre-litigation phase of this matter:
January 25, 2022. Caleb Jennings, Director of Grain Operations for GAP, sent a written demand to Darren K. Musgrave on behalf of GAP, demanding immediate payment of the three then-outstanding invoices — GAP-2021-3187, GAP-2021-3244, and GAP-2021-3301 — totaling $3,053,250.00 in principal. The demand was sent by certified mail and email and referenced PBGC's ongoing contractual obligations under the Off-Take Agreement.
February 3, 2022. Musgrave responded to GAP's demand via email, acknowledging the existence of the outstanding debt and requesting a 90-day forbearance period. In his communication, Musgrave stated that PBGC was actively negotiating additional financing with Heartland Prairie Bank, N.A. and anticipated being able to cure the arrearages if given additional time. Musgrave did not dispute the amounts owed and did not raise any counterclaims or defenses.
February 14, 2022. After internal deliberation, GAP agreed to a 60-day forbearance, subject to the express condition that PBGC make a partial payment in the amount of Invoice GAP-2021-3187 ($892,500.00) by March 1, 2022. The forbearance agreement was memorialized in a letter from Mr. Jennings to Mr. Musgrave and was acknowledged by PBGC.
March 1, 2022. PBGC failed to make the required partial payment by the March 1, 2022 deadline, thereby breaching the conditions of the forbearance agreement. No communication was received from PBGC or Musgrave regarding the missed payment.
March 8, 2022. GAP exercised its rights under Section 8.2 of the Off-Take Agreement (Adequate Assurance of Performance) and suspended all further deliveries of grain to PBGC, effective immediately. Written notice of the suspension was sent to PBGC at its principal office and to Musgrave individually.
March 22, 2022. GAP retained Calderwood & Harkness LLP to pursue collection of the unpaid invoices and to evaluate and prosecute all available legal claims against PBGC and Musgrave. The engagement letter was signed by Thomas R. Greenfield on behalf of GAP on this date.
March 28, 2022. A litigation hold notice was issued by the firm to GAP, directed to the attention of Caleb Jennings, instructing the preservation of all documents and electronically stored information potentially relevant to the anticipated litigation against PBGC and Musgrave. The notice encompassed all communications, contracts, invoices, delivery records, weight tickets, financial records, and correspondence relating to the Off-Take Agreement and PBGC.
April 5, 2022. An internal case assessment memorandum was prepared by Francesca Morano and circulated to Samuel Eklund, evaluating the merits of the potential claims, anticipated defenses, collectibility concerns, and recommended litigation strategy. The memorandum recommended proceeding with a formal pre-suit demand followed by filing suit in Cook County, consistent with the exclusive jurisdiction clause in the Off-Take Agreement.
April 11, 2022. Francesca Morano sent a formal pre-suit demand letter to PBGC (at its principal office and to its registered agent) and to Darren K. Musgrave (at his personal residence), demanding payment of all five outstanding invoices in the total principal amount of $4,870,050.00, plus all accrued interest at the contractual rate of 1.5% per month, within fifteen (15) business days of receipt. The demand letter placed PBGC and Musgrave on notice that GAP intended to pursue litigation and seek recovery of attorneys' fees and costs under Section 12.4 of the Off-Take Agreement if payment was not received.
May 2, 2022. The fifteen-business-day demand period expired. No payment, partial payment, or response of any kind was received from PBGC or Musgrave.
B. Litigation Phase (May–November 2022)
May 9, 2022. The Complaint was filed in the Circuit Court of Cook County, Illinois, County Department, Law Division, and was assigned Case No. 2022-L-004831. The case was assigned to the Honorable Patricia Delacroix. The Complaint asserted the following counts:
Count I — Breach of Contract (Off-Take Agreement) against PBGC. GAP alleged that PBGC breached its payment obligations under the Off-Take Agreement by failing to pay the five outstanding invoices, and sought recovery of $4,870,050.00 in principal, plus interest at the contractual rate of 1.5% per month from each respective due date until paid in full.
Count II — Breach of Personal Guaranty against Darren K. Musgrave. GAP alleged that Musgrave breached the Musgrave Guaranty (Exhibit D to the Off-Take Agreement) by failing to honor his guarantee of PBGC's payment obligations, and sought recovery of up to $2,000,000.00 under the guaranty cap.
Count III — Account Stated against PBGC. GAP alleged that the invoices constituted an account stated between GAP and PBGC, based on PBGC's receipt and retention of the invoices without objection and its implicit acknowledgment of the amounts owed.
Count IV — Unjust Enrichment (alternative) against PBGC. In the alternative, GAP alleged that PBGC was unjustly enriched by its receipt and use of the grain delivered by GAP without providing payment therefor.
The total amount claimed at filing was approximately $5,216,042.00, consisting of $4,870,050.00 in principal and approximately $345,992.00 in accrued interest calculated through the filing date.
May 24, 2022. Service of process was completed on both defendants. PBGC was served through its Illinois registered agent, Ridgeline Corporate Services LLC, at 77 West Washington Street, Suite 1420, Chicago, Illinois 60602. Darren K. Musgrave was personally served at his residence at 1188 Windermere Lane, Champaign, Illinois 61822. Proofs of service were filed with the Court and copies are retained in the file.
June 27, 2022. PBGC and Musgrave, through their counsel Bartlett, Reyes, Linley & Harkin LLP, filed a joint Answer and Affirmative Defenses. The Answer admitted certain allegations (including the existence of the Off-Take Agreement and the Musgrave Guaranty) and denied liability for the claimed amounts. The Affirmative Defenses asserted the following:
1. Force majeure, based on the October 17, 2021 fire at PBGC's Macon County elevator facility, which PBGC contended excused or suspended its payment obligations under the Off-Take Agreement;
2. Commercial impracticability, based on PBGC's assertion that the combined effect of the elevator fire, failed hedging positions, and adverse market conditions rendered its performance commercially impracticable; and
3. Failure to mitigate, alleging that GAP failed to take reasonable steps to mitigate its damages, including by failing to resell the grain to alternative buyers.
July 15, 2022. GAP, through Calderwood & Harkness, filed a Motion to Strike Affirmative Defenses, together with a Notice of Motion, Memorandum in Support, and Proposed Order. The Motion argued that the force majeure defense was legally insufficient because the force majeure clause in the Off-Take Agreement (Section 9.1) did not excuse payment obligations, and because the fire affected only one of PBGC's six elevator facilities and therefore did not render payment impossible. The Motion further argued that commercial impracticability under Illinois law requires objective impossibility, not mere financial difficulty, and that PBGC's financial distress—however severe—did not satisfy that standard. The failure-to-mitigate defense was addressed but was not challenged as legally deficient; GAP reserved its right to contest the factual basis for that defense at summary judgment or trial.
August 8, 2022. GAP filed a Reply in Support of its Motion to Strike Affirmative Defenses, responding to PBGC's opposition brief and reiterating GAP's arguments regarding the inapplicability of force majeure and commercial impracticability to excuse a buyer's payment obligations under a commodity supply agreement.
August 22, 2022. The Honorable Patricia Delacroix entered an order granting GAP's Motion to Strike as to the first and second affirmative defenses (force majeure and commercial impracticability) and denying the Motion as to the third affirmative defense (failure to mitigate). The Court's ruling was consistent with established Illinois precedent holding that force majeure clauses do not excuse payment obligations absent express language to that effect, and that financial hardship does not constitute commercial impracticability. The failure-to-mitigate defense was allowed to proceed to discovery and potential disposition on summary judgment.
September 12, 2022. A Case Management Conference was held before Judge Delacroix. The Court entered a Case Management Order setting the following discovery schedule: written discovery due November 30, 2022; fact depositions to be completed by February 28, 2023; expert disclosures due March 31, 2023; expert depositions to be completed by May 15, 2023; and dispositive motions due June 30, 2023.
September 30, 2022. GAP served its First Set of Interrogatories (20 interrogatories) and First Request for Production of Documents (32 requests) on PBGC. The discovery requests sought comprehensive information and documents relating to PBGC's financial condition, the elevator fire, PBGC's insurance coverage, hedging activities and losses, communications with Heartland Prairie Bank regarding default, and all documents supporting PBGC's failure-to-mitigate affirmative defense.
October 14, 2022. GAP served a Request for Admission on PBGC, seeking admissions regarding the authenticity of the five unpaid invoices, the execution and authenticity of the Off-Take Agreement and the Musgrave Guaranty, the delivery and acceptance of the grain covered by the invoices, and the non-payment of the invoiced amounts. PBGC did not respond to the Request for Admission prior to the withdrawal of its counsel or the imposition of the receivership stay.
November 4, 2022. Bartlett, Reyes, Linley & Harkin LLP filed a Motion to Withdraw as counsel for PBGC and Musgrave, citing the non-payment of legal fees as the basis for withdrawal. The Motion was served on both defendants at their respective addresses.
November 18, 2022. The Court granted the Motion to Withdraw, and Bartlett, Reyes, Linley & Harkin LLP was relieved of all further obligations of representation. The Court's order directed PBGC and Musgrave to obtain substitute counsel or notify the Court of their intent to proceed pro se within thirty (30) days. Neither defendant subsequently retained replacement counsel or appeared further in the Cook County action.
C. Receivership and Dismissal Phase (November 2022–February 2023)
November 28, 2022. Heartland Prairie Bank, N.A. filed a Verified Petition for Appointment of Receiver over PBGC in the Circuit Court of Sangamon County, Illinois, Case No. 2022-CH-001247. The Petition alleged that PBGC was insolvent, had defaulted on its obligations under the Revolving Credit and Term Loan Agreement, and that the appointment of a receiver was necessary to preserve and protect the assets of PBGC for the benefit of its creditors.
December 12, 2022. The Circuit Court of Sangamon County entered an Order Appointing Receiver, designating 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. The receivership order included an automatic stay of all pending litigation against PBGC and its assets, thereby barring the continued prosecution of the Cook County action against PBGC. The receiver was authorized to take immediate possession of all PBGC assets, books, records, and operations, and to manage, preserve, and liquidate the receivership estate in accordance with further orders of the Sangamon County Court.
Receiver's Counsel: Lockridge Payne LLP (Lead Attorney: Joanna M. Lockridge), 120 South Sixth Street, Suite 1800, Springfield, Illinois 62701. Lockridge Payne was retained by the receiver to represent the receivership estate in connection with all matters arising out of the receivership proceedings.
December 19, 2022. Calderwood & Harkness received formal notice of the entry of the receivership order and the automatic stay. Upon receipt, the firm prepared an internal memorandum analyzing the impact of the receivership and stay on the Cook County action, and communicated with GAP regarding the implications for the pending litigation and GAP's available options.
January 10, 2023. Calderwood & Harkness sent a letter to the receiver's counsel, Lockridge Payne LLP, formally asserting GAP's claim against the receivership estate. The letter set forth the basis for the claim, the amounts owed, and the supporting documentation, and requested that GAP's claim be recognized and included in any distribution plan. The total claim asserted in the letter was $4,870,050.00 in principal, plus approximately $492,341.00 in accrued interest through December 31, 2022, plus $302,037.85 in attorneys' fees and costs incurred by GAP in connection with the prosecution of the Cook County action.
January 30, 2023. Calderwood & Harkness filed a formal Proof of Claim on behalf of GAP in the Sangamon County receivership proceeding, Case No. 2022-CH-001247, asserting a total unsecured claim of approximately $5,664,428.85. The Proof of Claim was accompanied by supporting exhibits, including copies of the Off-Take Agreement, the Musgrave Guaranty, each of the five unpaid invoices, delivery receipts, a detailed interest calculation spreadsheet, and a summary of attorneys' fees and costs incurred. A copy of the filed Proof of Claim and all supporting exhibits is maintained in the file.
February 10, 2023. Following consultation with the client and upon the recommendation of the engagement team, GAP filed a Notice of Voluntary Dismissal Without Prejudice as to all counts (I through IV) and all defendants (PBGC and Musgrave) in the Cook County action, pursuant to 735 ILCS 5/2-1009. The decision to voluntarily dismiss was based on the following considerations: (i) the automatic stay imposed by the receivership order precluded further prosecution of the claims against PBGC in Cook County; (ii) GAP's claims were being preserved through the Proof of Claim filed in the Sangamon County receivership proceeding; (iii) the without-prejudice dismissal preserved GAP's right to refile against Musgrave individually on the guaranty claim if warranted; and (iv) the continued expenditure of attorneys' fees and costs in maintaining the dormant Cook County action was not justified while the stay remained in effect.
February 17, 2023. The Honorable Patricia Delacroix entered the Order of Voluntary Dismissal Without Prejudice. Case No. 2022-L-004831 was thereby closed on the docket of the Circuit Court of Cook County.
VIII. Final Disposition
Cook County Action (Case No. 2022-L-004831): Voluntarily dismissed without prejudice on February 17, 2023. All counts (Count I through Count IV) against all defendants (Prairie Basin Grain Co. and Darren K. Musgrave) were dismissed. No judgment was entered. No settlement was reached. No amounts were recovered in the Cook County action.
Basis for Dismissal: The automatic stay imposed by the December 12, 2022 Order Appointing Receiver in the Circuit Court of Sangamon County, Case No. 2022-CH-001247, rendered further prosecution of the Cook County collection action impracticable with respect to PBGC. GAP's claims against PBGC have been preserved through the timely filing of a Proof of Claim in the receivership proceeding. GAP's potential claim against Musgrave under the personal guaranty has been preserved by virtue of the without-prejudice nature of the dismissal. The client was fully advised regarding the implications of the voluntary dismissal, the preservation of its claims, and the applicable statutes of limitations prior to the filing of the Notice of Voluntary Dismissal.
IX. Open Matters and Preserved Claims
Although this matter is being closed, the following claims remain open or preserved. It is essential that this section be reviewed carefully and that the file be retained in accordance with the instructions set forth in Section XII below.
A. Receivership Claim
A Proof of Claim was filed on behalf of GAP on January 30, 2023, in the Sangamon County receivership proceeding, Case No. 2022-CH-001247. The total claim asserted is approximately $5,664,428.85, broken down as follows:
• Principal: $4,870,050.00
• Accrued Interest (through December 31, 2022): approximately $492,341.00
• Attorneys' Fees and Costs: $302,037.85
Claim Classification. GAP's claim is classified as an unsecured trade creditor claim. As such, it is subordinate to the senior perfected security interest held by Heartland Prairie Bank, N.A. under UCC Article 9, with an outstanding secured claim balance of approximately $31.4 million.
Recovery Prospects. The recovery prospects for unsecured creditors in the PBGC receivership are assessed as potentially minimal, given the significant shortfall between PBGC's total estimated liabilities ($58–62 million) and total estimated assets ($35–40 million), and the priority of Heartland Prairie Bank's secured claim. One potential source of additional recovery for the estate is the proceeds of the insurance coverage litigation with Triton Mutual Insurance Co. regarding the Macon County elevator fire. If that litigation resolves favorably for the PBGC estate, the insurance proceeds could increase the pool of assets available for distribution to unsecured creditors. However, the outcome of that litigation is uncertain.
Important Note Regarding Representation. GAP's receivership claim is not being handled by Calderwood & Harkness LLP under Matter No. 1020-00005 or any other current engagement. This matter is being closed. The client has been advised, in the Matter Closing Letter dated February 17, 2023, that it should engage counsel to represent its interests in the ongoing Sangamon County receivership proceedings if it wishes to actively participate in those proceedings, monitor developments, and protect its claim through any distribution process.
B. Musgrave Personal Guaranty
GAP's claim against Darren K. Musgrave under the limited personal guaranty (Exhibit D to the Off-Take Agreement) is preserved by virtue of the without-prejudice dismissal of the Cook County action. The key considerations regarding this claim are as follows:
• The Musgrave Guaranty is capped at $2,000,000, and Musgrave's liability is limited to that amount regardless of the total principal and interest owed by PBGC.
• The Musgrave Guaranty is a personal obligation of Musgrave as an individual and may not be subject to the automatic stay entered in the PBGC receivership proceeding. The receivership stay, by its terms, covers the assets and operations of PBGC, not the personal assets or obligations of Musgrave individually. Accordingly, GAP may have the right to pursue a separate action against Musgrave on the guaranty notwithstanding the pendency of the receivership.
• The client has been advised of its right to refile a separate action against Musgrave under the guaranty and of the applicable statute of limitations (discussed in Section IX.C below). As of the date of this memorandum, the client has not made a decision regarding whether to pursue the Musgrave guaranty claim. Any decision to pursue such a claim would require a new engagement and, depending on the client's preference, could be handled by Calderwood & Harkness under a new matter number or by other counsel.
C. Statute of Limitations Considerations
The voluntary dismissal without prejudice preserves GAP's right to refile its claims, subject to applicable statutes of limitations. The relevant limitations periods are as follows:
735 ILCS 5/13-217 (Refiling After Voluntary Dismissal). Under this provision, if a plaintiff voluntarily dismisses an action without prejudice, the plaintiff may commence a new action within one year of the date of the voluntary dismissal, or within the remaining period of the applicable statute of limitations, whichever is longer. Given that the Order of Voluntary Dismissal was entered on February 17, 2023, the one-year refiling window under Section 13-217 expires on February 17, 2024.
735 ILCS 5/13-206 (Written Contracts — Ten-Year Statute of Limitations). The Off-Take Agreement is a written contract governed by Illinois law, and the ten-year statute of limitations for actions based on written contracts applies. The earliest invoice in this matter (GAP-2021-3187) was due October 28, 2021. Accordingly, the latest refiling deadline under the general statute of limitations would be October 28, 2031. The limitations periods for the later invoices extend further, with the latest expiring on February 18, 2032 (corresponding to Invoice GAP-2022-0042, due February 18, 2022).
Practical Implication. Because the general ten-year statute of limitations extends well beyond the one-year refiling window under Section 13-217, GAP has substantial time within which to evaluate its options and, if it determines that pursuit of the Musgrave guaranty claim or refiling against PBGC is warranted, to initiate a new action. However, the client should be reminded that the passage of time may affect the collectibility of any judgment obtained, particularly as against Musgrave individually, and that prompt action is generally advisable.
X. Billing Summary
A. Professional Fees
Total professional fees billed through January 31, 2023 (the final billing period for this matter): $287,415.50.
Fees were incurred by the following timekeepers at the hourly rates set forth below:
A detailed breakdown of hours billed and amounts charged per timekeeper for each billing period is set forth in the Final Invoice Summary and Fee Statement maintained in the file. The fee summary includes a narrative description of tasks performed and time entries for each timekeeper by month.
B. Costs and Disbursements
Total costs and disbursements incurred and billed to the client: $14,622.35.
Disbursements included the following categories:
• Court filing fees (Complaint, motions, and related filings)
• Service of process fees (process server charges for service on PBGC and Musgrave)
• Court reporter fees (for attendance at Case Management Conference and related proceedings)
• Westlaw and legal research charges
• Photocopying, courier, and miscellaneous litigation expenses
C. Total Billed
Total amount billed to client: $302,037.85 (comprising $287,415.50 in professional fees and $14,622.35 in costs and disbursements).
All invoices rendered in connection with Matter No. 1020-00005 have been paid in full by the client. There is no outstanding balance owed by GAP to Calderwood & Harkness LLP at the time of matter closing.
XI. Key Documents in File
The following is a comprehensive index of the key documents maintained in the Calderwood & Harkness file for Matter No. 1020-00005. All documents are preserved in both physical (where applicable) and electronic format on the firm's document management system.
1. Engagement Letter (March 22, 2022)
2. Conflict Check Memorandum (March 21, 2022)
3. Litigation Hold Notice to Client (March 28, 2022)
4. Internal Case Assessment Memorandum — Morano to Eklund (April 5, 2022)
5. Pre-Suit Demand Letter to PBGC and Musgrave (April 11, 2022)
6. Complaint (filed May 9, 2022)
7. Summons — Prairie Basin Grain Co.
8. Summons — Darren K. Musgrave
9. Proof of Service — Prairie Basin Grain Co. (May 24, 2022)
10. Proof of Service — Darren K. Musgrave (May 24, 2022)
11. Joint Answer and Affirmative Defenses — PBGC and Musgrave (June 27, 2022)
12. Notice of Motion — Motion to Strike Affirmative Defenses (July 15, 2022)
13. Memorandum in Support of Motion to Strike Affirmative Defenses (July 15, 2022)
14. Proposed Order — Motion to Strike Affirmative Defenses (July 15, 2022)
15. Reply in Support of Motion to Strike Affirmative Defenses (August 8, 2022)
16. Order Granting Motion to Strike (Force Majeure and Commercial Impracticability); Denying as to Failure to Mitigate (August 22, 2022)
17. Case Management Conference Statement (September 12, 2022)
18. Case Management Order (September 12, 2022)
19. First Set of Interrogatories to PBGC (September 30, 2022)
20. First Request for Production of Documents to PBGC (September 30, 2022)
21. Request for Admission to PBGC (October 14, 2022)
22. Internal discovery Strategy Memorandum (September 2022)
23. Internal Status Memorandum to Client — Post-August 22 Ruling on Motion to Strike (September 2022)
24. Motion to Withdraw as Counsel — Bartlett, Reyes, Linley & Harkin LLP (November 4, 2022)
25. Order Granting Motion to Withdraw (November 18, 2022)
26. Internal Memorandum — Impact of Defense Counsel Withdrawal on Litigation Strategy (November 2022)
27. Verified Petition for Appointment of Receiver — Heartland Prairie Bank, N.A. (November 28, 2022) (copy)
28. Order Appointing Receiver — Sangamon County Case No. 2022-CH-001247 (December 12, 2022) (copy)
29. Internal Memorandum — Analysis of Receivership Order and Automatic Stay (December 2022)
30. Internal Memorandum — Receivership Claim Priority Analysis (January 2023)
31. Letter to Receiver's Counsel (Lockridge Payne LLP) Asserting GAP's Claim (January 10, 2023)
32. Proof of Claim with Supporting Exhibits and Interest Calculation (filed January 30, 2023)
33. Client Memorandum — Recommendation to Voluntarily Dismiss Cook County Action (January 2023)
34. Notice of Voluntary Dismissal Without Prejudice (filed February 10, 2023)
35. Proposed Order of Voluntary Dismissal Without Prejudice (February 10, 2023)
36. Entered Order of Voluntary Dismissal Without Prejudice (February 17, 2023)
37. Client Update Correspondence (May 2022)
38. Client Update Correspondence (August 2022)
39. Client Update Correspondence (December 2022)
40. Matter Closing Letter to Client (February 17, 2023)
41. Final Invoice Summary and Fee Statement
XII. Document Retention Instructions