Anderson Hay Enterprise - Case Summary

Business Description

Informally known as Anderson Hay, the Company is a family of entities that has produced and supplied high-quality, Pacific Northwest-grown forage products since 1960. Anderson Hay provides a wide variety of hay and straw, including compressed bales, pellets, and cubes, to a global customer base across more than 30 countries.

• In addition to its core forage operations, the Anderson Hay family of companies is engaged in several related businesses, including agricultural services, real estate ownership and leasing, and cattle ranching.
• The Company also operates a small-pet consumer products line through its Pet Holdings entity, which markets and sells hay-based products, bedding, and toys primarily through Amazon and other e-commerce channels.

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Operations Overview

The Anderson Hay enterprise is structured into two interconnected groups that, despite having separate cash management systems, function as a single collective enterprise: the Enterprise Group, focused on hay production and processing, and the MTA Holdings Group, centered on real estate and ranching. The entire enterprise is owned by Mark T. Anderson, who is the sole shareholder of the Enterprise Group’s parent company and the sole member of the MTA Holdings Group entities.

Enterprise Group

• Enterprise: Functions as the holding and treasury company for the group. It manages liquidity through a centralized cash sweep system, holds intercompany receivables and payables, and is a co-borrower on certain financing facilities. It does not have direct operational activities.
• AHG (Anderson Hay & Grain): The primary operating entity, responsible for purchasing, processing, packaging, and selling baled hay, pellets, and cubes to domestic and international customers. AHG also provides custom processing and trucking services and employs 148 individuals.
• Agri: The field-level agricultural and harvesting entity. It contracts with landowners to manage and harvest crops, selling substantially all of its product to AHG to ensure a reliable and cost-effective supply chain.
• MTA Farms: Primarily a land and facility lessor, leasing farmland from third parties and subleasing it to farmers. It also leases shop and storage space to Agri.
• Pet Holdings: Manages the Company’s e-commerce line for small-pet products. It has no employees, relying on other Enterprise Group entities for production, packaging, and logistics services.

MTA Holdings Group

• MTA Holdings: Serves as a landlord to AHG and other third parties and generates revenue from rock and soil sales from its properties.
• MTA Ranch: Operates a cattle ranch, provides trucking and heavy-equipment services, sells rock and soil from MTA Holdings’ sites, and owns residential rental properties. It employs all personnel within the MTA Holdings Group and is a co-borrower on the PGIM notes.

Intercompany Operations and Family Involvement

• The two groups are operationally dependent, with liquidity for the Enterprise Group centralized at Enterprise and operating assets cross-collateralized with real property owned by the MTA Holdings Group.
• Ordinary-course intercompany transactions are critical to operations, including rent payments from AHG to MTA Holdings, trucking services from MTA Ranch to AHG, and management services between the entities.
• Multiple members of the Anderson family are involved in the business as employees or creditors, including Mark T. Anderson, his wife, his children, and his mother.

Workforce

• The Debtors employ approximately 167 individuals across three entities: AHG (148 employees), Agri (12 employees), and MTA Ranch (seven employees).

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Prepetition Obligations

The Debtors’ prepetition capital structure consists of secured credit facilities, equipment financing, and various affiliate and related-party notes.

Secured Debt

• AgWest Loan Agreement: Approximately $20.0 million is outstanding under a revolving credit facility with AgWest.
  • The facility is secured by machinery, equipment, crops, inventory, accounts receivable, and certain real property.
  • Borrowers include AHG, Enterprise, Agri, Pet Holdings, MTA Farms, and MTA Holdings.
• PGIM Loans: Approximately $15.4 million is outstanding across three notes with PGIM.
  • The loans are secured by real property and fixtures owned by MTA Holdings and MTA Ranch.
  • Borrowers are AHG, MTA Holdings, and MTA Ranch, with Agri, Pet Holdings, and MTA Farms acting as guarantors.
• Other Secured Notes: The Debtors have various other secured obligations, including:
  • Approximately $550,000 in equipment notes owed by AHG.
  • Over $1.1 million in notes owed by MTA Ranch, secured by real property, irrigation equipment, farm equipment, and a vehicle.

Affiliate and Unsecured Debt

• Affiliate Notes: The capital structure includes several formally documented intercompany and affiliate notes.
  • Enterprise is the obligor on a $4.5 million note payable to MTA Holdings and a $1.9 million note payable to non-debtor Anderson Financial LLC.
• Unsecured Note: AHG is the obligor on an approximately $1.27 million unsecured note payable to Robin Anderson, the mother of owner Mark T. Anderson.

The Debtors may also be subject to various agricultural and crop liens arising from their operations under applicable non-bankruptcy law.

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Events Leading to Bankruptcy

The Company’s financial distress was driven by a combination of severe macroeconomic headwinds in its core export markets, rapidly rising operating costs, and a resulting liquidity crisis exacerbated by its primary lender’s decision to reduce credit availability.

Macroeconomic and Market Pressures

• As a primarily export-focused business, with approximately 80% of revenue from foreign sales, Anderson Hay was heavily impacted by a global downturn in the dairy industry, particularly in its key markets of Japan, Korea, and China.
• Demand for imported forage declined as China culled its dairy herds and increased domestic forage production, while Japan implemented subsidies for locally produced feed. According to an industry report, exports to Japan fell by approximately 25% from 2022 to 2024.
• The Company faced heightened competition from lower-cost suppliers in Australia and Europe, as well as from alternative feeds like corn and soybean meal. A stronger U.S. dollar further eroded its price competitiveness in foreign markets.
• In 2022, the Company experienced a severe margin squeeze after purchasing raw materials at record-high prices, only for export market prices to collapse by the end of the year, leading to significant inventory losses.

Rising Costs and Turnaround Efforts

• The Company’s financial performance was further strained by rapidly rising operating costs, including a 25% increase in minimum wages in Washington and Oregon from 2020 to 2025, new overtime requirements for agricultural workers, and significantly higher equipment and fuel costs.
• In response, management implemented significant cost-reduction measures across its plant, harvest, and administrative functions. The Company also began a strategic pivot toward the more stable and higher-margin U.S. domestic horse market and sought partnerships to fix volumes and margins.

Liquidity Crisis and Chapter 11 Filing

• The Company’s primary lender, AgWest, began actively seeking to exit the credit relationship, systematically reducing the Company’s revolving line of credit from $35 million in October 2022 to $15 million by May 2025. These reductions severely constrained the Debtors' operational flexibility.
• After the AgWest facility matured on July 1, 2025, the Company continued making payments while attempting to negotiate a forbearance or replacement financing. However, AgWest issued a notice of default in March 2025 and a notice of acceleration on Oct. 3, 2025.
• With no unencumbered funds and unable to secure alternative financing, the Debtors determined a Chapter 11 filing was necessary to stabilize operations through the use of cash collateral and preserve the value of the enterprise for all stakeholders.