High-Profile Crash of a Titan

January 11, 2012 05:24 AM
High-Profile Crash of a Titan

Two farming companies managed by a controversial Illinois farmer declare Chapter 11 bankruptcy

For much of the past decade, Rick Rosentreter has been bad-mouthed in coffee shops and on Internet discussion boards during his race to amass a large farm operation. He became a titan farmer by accumulating some 30,000 rental acres across central Illinois just 13 years after farming only 2,000 acres. The Carlinville, Ill., farmer has been accused of driving rents to unreasonable rates and destroying the moral fabric of the surrounding rural communities.

Now, the future for Rosentreter is in doubt as his two farming companies, Illinois Family Farms and Illinois Family Farms Leasing Company, have filed for Chapter 11 bankruptcy protection. The leasing company filed on Oct. 12, 2011, followed by Illinois Family Farms LLC on Nov. 23.

A former Top Producer of the Year finalist, Rosentreter did not respond to our calls or e-mails regarding this article.

Bankruptcy isn’t necessarily the end of a farming career, but it is important to investigate what happened. To gain insight for this article, we interviewed long-time agribusiness consultant Allen Lash, a trusted mentor for Rosentreter.

One of the ways Rosentreter was attempting to stay competitive was to become a founding member of FamilyFarms LLC, a group started in 2008 by Lash.

The Brighton, Ill.-based consultant once tagged Rosentreter as one of his all-time "best students." During a 2008 Top Producer interview, Rosentreter responded to the question, What’s next for you? with a smile and said, "I don’t know, Allen hasn’t told me yet."

The History. The driving force behind Rosentreter’s quest for growth has been well documented. While drilling beans in 1998, he watched as "a parade of large equipment rolled by." As the story goes when told by Rosentreter, another area megafarmer was on his way to plant a field that Rosentreter had farmed the previous year, only to be outbid for the rental acres. He’s referred to it as the most pivotal moment in his career.

The Summer 2006 Top Producer article, "Cash in on Rent" profiled Rosentreter. In that article, he referenced his get-bigger revelation: "It was a wake-up call that my dad and I had to change the way we did business or be run over," he explained.

In addition to farming at that time, he worked in the farm management department of the Carlinville National Bank. Ironically, today he owes that bank more than $15 million, most of it unsecured.

The Carlinville bank has filed a foreclosure petition on Rosentreter’s personal household and has requested that the bankruptcy court waive its stay on foreclosures while the bankruptcy reorganization takes place. No ruling has been made.

Flawed Model? Lash says the bankruptcy proceedings should not be viewed as a failure of the FamilyFarms model, which Lash tags as a peer group with much to offer. For example, he says, if a local equipment dealer files for bankruptcy, that doesn’t mean the equipment brand is not a success. It only means the local dealer didn’t make it. A mutual decision, Lash says, was reached and Rosentreter will not continue as a member of FamilyFarms.

While Lash says he retains empathy and compassion for Rosentreter, he maintains there should be lessons taken from the downfall of the titan.

"We have learned how important control systems are," Lash says. "We have defined five control systems farmers need to implement, and we’re putting an emphasis on them."

Rosentreter’s situation shines a spotlight on the need for those systems, Lash says.

"Any farm that is going to be growing rapidly in the future must have controls," he notes. "Do they have processes to ensure those control processes are in place? Are they managing and monitoring them?"

A new feature of the FamilyFarms program is a general manager training segment. The main focus is process management.

"We now tell people if they grow to a certain size, and they don’t have these systems in place, they should not grow anymore," he says.

These systems, Lash says, will help the more than 30 FamilyFarms members across the U.S. to stave off business cycle downturns and weather difficult times. He references Rosentreter’s two- to three-year stretch of poor production as an example.

Lash did not indicate what went wrong with the Rosentreter case. The Chapter 11 filing documents answer some questions and raise others, notes Neil Harl, retired Iowa State University economist and attorney.

"Why did gross farm income, which exceeded $15 million in 2010 and $10 million in 2009, drop to $2.3 million in 2011 through the date of filing?" Harl asks. "That is a highly suspicious entry."

Looking at the filing that lists $1.7 million in assets to nearly $32 million in liabilities, Harl says, "Usually, in a situation like this when the debtor is this far underwater, Chapter 7 is a likely outcome." 

Bankruptcy Filings for Rick Rosentreter

Liabilities far outstrip the assets listed in the bankruptcy filings for Rick Rosentreter’s two farming companies. The numbers are taken from the United States Bankruptcy Court, Central District of Illinois, Springfield Division.

Illinois Family Farms

  • Assets: $1,728,367.69
  • Liabilities: $31,039418.79
  • Unsecured: $15,181,221.79
  • Secured: $15,858,197.00

Illinois Family Farms

  • Leasing Company
  • Assets: $773,784.60
  • Liabilities: $17,519,155.90
  • Secured: $17,468,711.49

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Spell Check

1/11/2012 10:44 AM

  How can one acquire 15 million in UNSECURED loans with the Feds not looking into the situation?

1/11/2012 01:48 PM

  That article is a joke. It didnt explain any details on why a operation of that size failed. A few years ago they were singing praises about this guy and then when it goes into the crapper there is barely a wimper. It is obvious what kind of operator this magazine wants to promote.

1/11/2012 02:00 PM

  If I remember right all of the magazines praised this "youg tiger".Back in High School guys like that came to our ag classes and spoke about how tofarm in the new age. They are all gone. This was the eighties. Eugene Smith was one of those. We are now blessed with an entire generation that werent even born then.These times will change and change hard and quick


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