Bankruptcy Court Clarifies the Iowa Ag Supply Dealer’s Lien

In two recent cases, Farmers Coop. Co. v. Ernst & Young, Inc. (In re Big Sky Farms Inc.), No. 12-01711, 2014 Bankr. LEXIS 1725 (Bankr. N.D. Iowa Apr. 18, 2014) and In re Schley, No. 10-032522014, Bankr. LEXIS 1724 (Bankr. N.D. Iowa Apr. 18, 2014), the Bankruptcy Court for the Northern District of Iowa interpreted the Iowa Agricultural Supply lien statute, Iowa Code §570A.5, finding:

1. The statutory ag supply dealer's lien does extend to the proceeds of the supply input (i.e. in In re Schley, the court found that the supplier's lien on pigs extended to the proceeds from the pre-petition sale of the pigs).
2. An earlier decision by the same bankruptcy court (In re Shulista,451 B.R. 867 (Bankr. N.D. Iowa 2011)) remained good law after the Iowa Supreme Court's decision in Oyens Feed & Supply, Inc., No. 11-0532 (Iowa Sup. Ct. Dec. 30, 2011). As such, an ag supply dealer's lien is only effective against the inputs purchased during the 31-day period preceding the filing of the financing statement.