Attorneys representing HyLife, the Canadian pork company that shuttered a processing plant in Windom, Minn., this year, say the Iowa company that bought the facility owes it $214,650 for property taxes.
HyLife said it mistakenly deducted the tax obligation — which should've been paid by the buyer, Premium Iowa Pork — from the $14 million sale of the sprawling pork facility due to a bookkeeping error.
So far, Premium Iowa Pork is refusing to return the money.
In a court filing entered on Wednesday in the U.S. Bankruptcy Court for the District of Delaware, HyLife's attorneys said the parties "mistook an amount due for post-closing taxes as being pre-closing taxes."
The Manitoba-based company calls the six-digit figure an unearned "windfall" for the Iowa processor.
"Upon realizing that an incorrect figure was provided" to Premium Iowa Pork's attorneys, HyLife's legal team "made multiple efforts to resolve the mistake," wrote HyLife's attorneys, in the motion calling for Judge Thomas Horan to settle the dispute.
Premium Iowa is unmoved.
"The figures for the property taxes due and payable as of the date of closing were provided by your firm," said Premium Iowa's Des Moines-based attorney Sheridan DeJong, in a July 7 email to Jerry Hall, an attorney representing HyLife. "As a result, no additional funds are owed to the debtor."
It is unclear from the court record who made the accounting mistake. But a string of emails between the law firms suggest the mistake may be traced to a message sent by PricewaterhouseCoopers, a global business firm, just days before the sale with a tax assessment on land parcels owned by HyLife.
A spokesperson for PwC did not immediately respond to a request for comment.
Under the details of the sale agreement, Premium Iowa was to pay all 2023 taxes beginning from the closing of the deal. It's evident from the court record that HyLife had paid all 2022 taxes, but had been penalized for missing payment deadlines on the first half of 2023.
In a phone call, Donna Torkelson, the Cottonwood County auditor-treasurer, noted the error did not arise with her office.
"This maybe could've been avoided if HyLife had paid their taxes on time," Torkelson said.
While the sale closed two months ago, HyLife said the loss of $214,650 would come "at the expense of debtors and their creditors." The long list of creditors still owed money by HyLife ranges from a Chanhassen-based development company, awaiting payment of more than $7 million for an unfinished housing project in Windom, to a southern Minnesota electrician's $300 invoice.
Last month, Dan Paquin, president of Premium Iowa, told the Star Tribune in an email that the company was still reviewing how the plant will fit into the company's model, which includes three other operational facilities.
"While the product that will be produced in this location is not yet determined, the Windom plant will be producing high-quality natural pork like our other existing operations in the region," he said.