LINCOLN, Neb. (DTN) -- The state of Iowa asked a federal bankruptcy court in Nebraska for permission to pay farmers and others who lost money in the Hansen-Mueller Company failure by using a $500,000 surety bond paid by the company in the state, in a filing with the court on Monday.

The Omaha-based Hansen-Mueller filed for Chapter 11 bankruptcy in November 2025 after reports surfaced in Nebraska and other states that farmers and other businesses were not paid for grain delivered.

According to Hansen-Mueller's bankruptcy filing in the U.S. Bankruptcy Court of Nebraska, the company owes creditors up to $500 million.

The Iowa Department of Agriculture and Land Stewardship on Monday asked the court to grant a stay to allow the state to pay Iowa farmers and businesses in part using the Hansen-Mueller bond. Claims to Iowa's indemnity fund are due by March 17, 2026. Iowa joins Nebraska and North Dakota in filing the same motion.

The Iowa ag department regulates grain warehouses and dealers including Hansen-Mueller.

"However, in lieu of suspending a grain dealer's ability to purchase grain by credit-sale contract, IDALS may allow a grain dealer to continue to purchase grain by credit-sale contract if the grain dealer files a bond with the department," Iowa said in its court motion.

"Bonds 'must be written so as to provide funds to protect producers who have sold grain to the licensed grain dealer.'"

Iowa law allows the use of the bond to indemnify sellers for losses resulting from breach of credit-sale contracts.

According to DTN's analysis of the creditors matrix in the Chapter 11 filing, there are 29 creditors from Iowa.

"IDALS seeks to open the process to allow sellers to file claims against the debtor's surety bond for credit-sale contracts so that IDALS can process claims to indemnify sellers for losses resulting from the debtor's breach of credit-sale contracts," the state said in its motion.

"The penal sum of a surety bond is not property of a bankruptcy estate because a debtor does not have an interest in the penal sum intended for the benefit of third-party claimants."

During the past couple of months, numerous grain sale claims have been filed in the Nebraska court. Hansen-Mueller sold numerous assets during an auction in December.

The company reported an estimated 1,000 to 5,000 creditors and lists between $100 million and $500 million in both liabilities and assets. In addition, Hansen-Mueller filed a list of its 20 largest unsecured creditors.

Sitting atop the list is Viterra Canada Inc. at about $4.7 million. That is followed by Cargill at $2.6 million; Agmark LLC in Beloit, Kansas, at $2.1 million; Comark in Enid, Oklahoma, at $1.3 million; ShawNuff in Monroe, Louisiana, $1.2 million; Alliance Ag and Grain in Spearville, Kansas, at about $1 million; and Chisholm Trail Terminal in Medford, Oklahoma, which is also owed around $1 million.

Unsecured creditors are people or business entities that are owed money by a debtor, but there is no collateral backing the debt. Unsecured creditors are at a higher risk of not being paid.

Read more on DTN:

"Neb. Grain Company Files Chapter 11," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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