By Jeremy Hill

Easterday Ranches Inc. is almost out of food for its 54,000 cattle. A bankruptcy judge may rescue them.

The cattle farm in Washington state filed for Chapter 11 bankruptcy on Monday after its only customer, Tyson Fresh Meats Inc., sued for more than $200 million, claiming it was being billed for the upkeep on bovines that don’t exist, court papers show. Tyson slashed payments to the ranch, and Easterday is now almost out of money.

The business projects it will run out of food for the animals on Thursday and can’t buy more, according to court papers. Tyson has agreed to give Easterday cash to purchase feed, but because the ranch is also in default on a credit line, a bankruptcy judge would need to bar creditors from laying claim to the money.

Without the order, Easterday “would be forced to terminate operations, which would have the drastic effect of putting approximately 54,000 cattle at risk of death,” Co-Chief Restructuring Officer T. Scott Avila said in a court declaration. A hearing on the matter was scheduled for today at 1 p.m. Pacific time.

“We’re following the proper procedures through bankruptcy court to ensure that all cattle that remain at Easterday feedlots are properly cared for,” a representative for Tyson said in an emailed statement. Easterday didn’t immediately provide a comment.

Counting cattle

The cattle ranch is part of an 18,000-acre farm that also grows potatoes, onions, corn and wheat in southeast Washington. The farm business, which isn’t included in the bankruptcy filing, sells grain to the ranch to feed the cattle, and Tyson reimburses the ranch for the cost of raising the animals.

The problem, Tyson alleges, is that many of the cattle it was paying to feed didn’t exist. Fraudulent invoices led Tyson to overpay for the purchase and feeding of cattle by more than $200 million, the meat giant alleges in a lawsuit filed last month.

Tyson cut payments to Easterday as a result, but still paid the ranch’s vendors directly prior to the bankruptcy, according to court papers. Tyson also asked for a court-appointed receiver to take over the ranch, which then filed for bankruptcy.

The case is Easterday Ranches Inc., 21-00141-WLH11, U.S. Bankruptcy Court for the Eastern District of Washington (Spokane/Yakima). To view the docket on Bloomberg Law, click here.

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