Black Eagle Farm files for bankruptcy before auction

A 2,000-plus acre farm in Nelson County valued at $15.5 million filed for bankruptcy on Wednesday, a day before it was scheduled to go up for public auction on the steps of the Lovingston courthouse.

Black Eagle Farm was being foreclosed on because of failure to pay on a $5.29 million loan from a Charlottesville bank. It also owes about $56,000 in local taxes.

The bankruptcy documents filed Wednesday halted the foreclosure auction. In the filing, farm officials said the farm incurred expenses to expand in 2008 and has suffered lower profits since then due to the recession, and it is trying to refinance its debt.

Andrew Goldstein, the Roanoke lawyer handling the bankruptcy case, said a bankruptcy judge approved a request from the farm officials to continue operating the business.

“The court basically approved our budget going forward and will allow us to use the cash we generate from the sale of eggs and the like to keep the company in business,” Goldstein said.

Ralph Glatt, president of E.W.G. Corporation, did not return phone calls seeking comment.

E.W.G. Corporation is named for Ernst Werner Glatt, who was an arms dealer for the U.S. during the Cold War, according to Ken Silverstein, an editor for Harper’s Magazine who wrote an article about Glatt in 2000.

Black Eagle Farm is located in Piney River and has acreage that spills into Amherst County. It produces eggs — which its Web site says are sold to stores that include Ukrops and Whole Foods — and pasture-raised beef, cattle and goats.

The farm in Nelson County is valued at about $9 million by the county, but an assessment in September 2008 valued the farm and all of its property at $15.5 million, according to bankruptcy documents.

Last year it announced the opening of a facility that would make it the largest organic free-range egg producer in the state. While renovating and expanding its facilities, it took out a $5.29 million loan from Virginia National Bank, based in Charlottesville.

The farm was scheduled to be sold in a foreclosure auction on Thursday at 11 a.m. because it had defaulted on that loan.

Around 10 a.m. Thursday, attorneys for E.W.G. Corporation notified the Nelson County Commissioner of the Revenue that the company had filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court Western District of Virginia in Lynchburg.

Chapter 11 bankruptcy puts a hold on all of the corporation’s debts while it reorganizes and makes a plan to pay its debts.

According to bankruptcy documents filed Wednesday, the company estimates it has between $10 million and $50 million in assets and between $1 million and $10 million in debts.

Glatt said in the bankruptcy documents that the timing of the expansion, followed by the steep economic decline, caused financial problems.

“Because of the collapse of the credit markets and pressure on margins caused by the downturn in the economy, the (company) became financially distressed,” Glatt said.

In addition to the debt to Virginia National Bank, E.W.G. Corporation owes about $1 million to Hershey Equipment Co. in Lancaster, Pa., and about $50,000 in taxes to the Internal Revenue Service.

Local tax records show that E.W.G. Corporation owes Nelson County $45,000 in back real estate taxes and more than $3,000 in back personal property taxes. In Amherst County it owes $8,000 in back real estate taxes.

Businesses pay personal property taxes on equipment and vehicles used in business operations.

The bankruptcy filing does not mention the amounts of the local tax debts. Goldstein said he is aware E.W.G. Corporation has some tax debts but he does not have details on them yet.

Other debts include $6,370.67 for miscellaneous construction materials that were not paid for in 2008, a mechanics lien shows. Last June, E.W.G. Corporation was ordered to pay $227,410.07 to the Augusta Co-op Farm Bureau Inc.

Glatt owns a condominium in Wintergreen and has repeated liens against the property for unpaid condominium owners association fees, court documents show. Goldstein said he did not have information on those liens.

The company’s board of directors approved a resolution that “it is in the best interest of this Corporation to file” for bankruptcy, documents show.

The board of directors includes Ralph Glatt, president; Vera Glatt, vice-president; James W. Gillespie, vice-president; Maura L. Glatt, secretary and treasurer; and Ernst Werner Glatt, director, State Corporation Commission reports show.

Goldstein said that the company is working to refinance the loan from Virginia National Bank and obtain additional financing as well.

Farm officials also are working to increase sales. They are trying to arrange to package and ship eggs for other producers, he said. “Operationally, there are some changes that can be made to both increase sales and reduce costs.”

McGrath is a staff writer for the Nelson County Times; Gentry is a staff writer for The News & Advance.