A federal bankruptcy judge has rejected a motion to have Millenkamp Cattle, a large Idaho cattle and dairy company, operated by a Chapter 11 trustee.

Rabo AgriFinance, a major agricultural lender, claimed the company is being mismanaged during Chapter 11 bankruptcy proceedings, which are intended to restructure its debts and business.

Chief Bankruptcy Judge Noah Hillen has denied the lender’s request to have a Chapter 11 trustee take over management of Millenkamp Cattle in place of Bill Millenkamp, the company’s founder.

“While the debtor’s compliance with all court-imposed requirements has not been perfect, the debtor’s actions do not rise to the level of establishing cause to appoint a Chapter 11 trustee,” Hillen said during a recent court hearing.

Rabo AgriFinance argued that a trustee should assume management of the company partly because Bill Millenkamp is facing felony charges of aggravated battery and false imprisonment for allegedly pushing a man from a moving vehicle earlier this year.

The lender questioned whether Millenkamp will be able to run the company, as he faces up to 15 years in prison, and “whether someone subject to these types of criminal charges should be the fiduciary responsible” for property that serves as collateral for loans.

Aside from the criminal case, Rabo AgriFinance complained that Millenkamp had spent nearly $300,000 on new pickup trucks shortly before filing for bankruptcy protection and has paid $50,000 for machinery repairs without the bankruptcy court’s permission, among other allegations.

In ruling on the lender’s motion, the judge did not address Millenkamp’s criminal prosecution or certain other allegations made by Rabo Agrifinance, such as an alleged attempt to have his son’s wedding expenses treated as an administrative claim under bankruptcy proceedings.

The judge said that “appointing a Chapter 11 trustee is an extraordinary remedy” and denied the motion because Millenkamp has timely been submitting financial records to creditors and has kept the company’s spending within an approved budget.

It’s not unusual for a company to replace vehicles as they wear out and Millenkamp Cattle’s conduct has not given rise to any allegations of mismanagement from the U.S. Trustee’s Office, a division of the U.S. Department of Justice that oversees bankruptcy cases, the judge said.

However, Rabo Agrifinance did prevail on another matter before the judge: Whether Millenkamp Cattle should have the exclusive right to file a reorganization plan through the end of March 2025.

Companies in Chapter 11 bankruptcy protection, which shields their assets from foreclosure, have the exclusive right to file reorganization plans, but the exclusivity period expires unless it’s extended by a bankruptcy judge.

In this case, the judge twice extended Millenkamp’s exclusivity period but has denied the most recent request, which has the effect of allowing creditors to submit competing reorganization plans for the bankruptcy court’s consideration.

The judge said the possibility of competing proposals will serve as a “necessary check” on Millenkamp Cattle, which has “struggled to make progress” on getting a plan confirmed.

The company’s initial proposal focused on a potential $120 million refinancing deal from the Cargill agribusiness firm that didn’t end up coming to fruition, the judge said.

Under the most recent proposal, another refinancing deal wouldn’t fully repay all the company’s existing debts, requiring another loan in the future, he said.

“The court is concerned the debtor’s plan to refinance out of this problem is simply running out of road,” the judge said.

Allowing for competing reorganization plans is intended to “galvanize” negotiations with creditors to reach a viable plan, he said.

“The court concludes it will serve as a catalyst to move this case forward toward a fair and equitable resolution,” Hillen said.

Millenkamp Cattle will be allowed to continue using cash that serves as collateral during bankruptcy proceedings, despite an objection from Rabo AgriFinance.

The judge said that creditors have an adequate “equity cushion” to allow for continued use of cash collateral, as Millenkamp Cattle owns nearly $500 million in real estate, while the liens on that property total about $316 million.

The company was started roughly three decades ago by Bill Millenkamp and his wife, Susie, as a 40-acre “calf-raising operation,” but it has since grown to more than 100,000 beef and dairy cattle and 20,000 acres, including feedlots and dairy facilities.

The company’s conflict with Rabo Agrifinance has played a prominent role throughout the bankruptcy case, with Millenkamp claiming the lender had engaged in a “squeeze” to deprive it of capital and force a court-appointed receiver to take over its management.

Rabo Agrifinance, meanwhile, has objected to the company’s proposed reorganization plans, arguing they would unfairly deprive the lender of interest and fees.

The lender has also claimed the plans would allow the Millenkamp family to retain an overly generous amount of equity in the company, while a Chapter 11 trustee could “explore all available options,” including a sale of the firm.