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Commitments and Contingencies
9 Months Ended
Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies.

Commitments

The Company has grain supply agreements with a single supplier to purchase its corn requirements. These grain supply agreements expire December 31, 2014.  At September 30, 2013, the Company had commitments to purchase corn to be used in operations through December 2014 totaling $31,687.

The Company has commitments to purchase natural gas needed in production at fixed prices at various dates through March 2014.  The commitment for these contracts at September 30, 2013 totaled $3,498.

The Company has a supply contract for flour for use in the production of protein and starch ingredients.  The initial term of the agreement, as amended, expires October 23, 2015.  At September 30, 2013, the Company had purchase commitments aggregating $11,986 through March 2014.

As of September 30, 2013, the Company had contracts of approximately $842 to acquire capital assets.

At September 30, 2013, the Company had $2,000 outstanding on a letter of credit for a vendor, which reduced the amount available to the Company under its revolving line of credit.

Contingencies

There are various legal proceedings involving the Company and its subsidiaries. Management believes that the aggregate liabilities, if any, arising from such actions would not have a material adverse effect on the consolidated financial position or overall trends in results of operations of the Company.
On June 14, 2013, the Company filed a petition for declaratory judgment in the District Court of Johnson County, Kansas, against Richard B. Cray, Thomas Cray, Cloud L. Cray Jr., Karen Seaberg, Laidacker M. Seaberg, and Timothy Newkirk, as co-trustees of either MGP Ingredients Inc. Voting Trust or the Cray Family Trust. The Company has requested a declaratory judgment determining the parties’ legal rights and obligations in the context of proxies for the Annual Meeting and the status of the Voting Trust. The petition alleges that the co-trustees may be unqualified to serve as co-trustees and asks the Court to resolve the resulting controversy. The defendants filed a Motion to Dismiss on August 1, 2013. On October 2, 2013, the Court dismissed all allegations by the Company and Mr. Newkirk to the extent they implicate any standing to challenge the conduct of the Voting Trust directly. On October 16, 2013, the Company filed a motion to amend the October 2, 2013 order on defendants’ motion to dismiss in order to include findings allowing interlocutory appeal, or, in the alternative, to enter a journal entry of final judgment as to petitioner. The Hearing is set for November 18, 2013. On October 21, 2013, the defendants filed a motion for summary judgment on the cross-claim of Mr. Newkirk, as well as a motion to dismiss cross-claim of Mr. Newkirk for lack of standing and subject matter jurisdiction due to termination of the trusts. Hearing date for these two motions is December 3, 2013. In its additional definitive proxy soliciting materials filed on October 18, 2013, the Cray Group disclosed that on September 26, 2013, a majority of the trustees of the Cray Family Trust took action to terminate the Cray Family Trust and to distribute its assets upon termination to the three beneficial owners, The Foundation of the Atchison Family YMCA (the “YMCA”), the University of Kansas Endowment Association and Cloud L. Cray, Jr. In connection with the termination of the Cray Family Trust, on September 23, 2013, Karen Seaberg entered into an option to purchase the Voting Trust Certificates distributed to the YMCA and exercised the option on October 16, 2013.
On July 10, 2013, Cloud L. Cray, Jr. and Karen Seaberg filed a petition for inspection of corporate records pursuant to K.S.A. §17-6510 by a shareholder in the District Court of Atchison County. The plaintiffs as shareholders of the Company made demand to inspect corporate records pursuant to K.S.A §17-6510. The Company did not produce some of the records requested by the plaintiffs. The plaintiffs filed the petition to compel the production of the remaining records. On July 26, 2013, the Atchison County District Court granted the plaintiffs’ petition and ordered the Company to produce the remaining records. The Company complied with the Court order. The Court also ordered the plaintiffs to submit their request for attorney fees and expenses. A separate hearing will be held to determine whether the plaintiffs should be awarded attorney fees and expenses in connection with the request of corporate records. This amount has not been reflected in the Company’s financial statements as the amount of plaintiff attorney fees is estimated to be immaterial to the Company’s financial statements.
On July 11, 2013, Cloud L. Cray, Jr. and Karen Seaberg filed a petition for an order requiring the Company to conduct the Annual Meeting in the District Court of Atchison County, Kansas. On July 26, 2013, the Atchison County District Court granted the plaintiffs’ petition and ordered the Company to hold the Annual Meeting on or before August 26, 2013 at 9 a.m. The Court also ordered the plaintiffs to submit their request for attorney fees and expenses. A separate hearing will be held to determine whether the plaintiffs should be awarded attorney fees and expenses in connection with the litigation concerning the holding of our Annual Meeting. This amount has not been reflected in the Company’s financial statements as the amount of plaintiff attorney fees is estimated to be immaterial to the Company’s financial statements. On August 1, 2013, the Company and the defendants filed separate motions to amend and or modify the July 26 Order with respect to the record date and after a telephone hearing on August 2, the Court ordered that the Annual Meeting was to reconvene on or before August 26, 2013.
On August 1, 2013, Cloud L. Cray, Jr. and Karen Seaberg filed a petition against the Company and the Board of Directors, for a temporary injunction pursuant to K.S.A. § 60-901 et seq. requesting the Court to enter a temporary injunction (i) prohibiting the Company and the board members from continuing to utilize, meet as, or act as the Special Committee that was appointed on May 23, 2013; (ii) prohibiting defendants from excluding plaintiffs from discussions and deliberations of the Special Committee or any other committee concerning any review of strategic alternatives for the Company on which plaintiffs have no conflict of interest; (iii) prohibiting defendants from refusing to provide plaintiffs with all information conveyed to other directors through or by the Special Committee about the exploration of strategic alternatives for the Company; and (iv) requiring defendants to immediately provide to plaintiffs all past, present and future information conveyed to other directors through or by the Special Committee about the exploration of strategic alternatives for the Company. After a hearing on August 13, 2013 and on August 20, 2013, the Court denied in part and granted in part the plaintiff’s petition. After negotiations between the parties, the parties agreed to continue with the injunction in place and stay the matter for 180 days.  At the conclusion of the 180 day period, the parties will advise the Court if any additional proceedings are necessary.
On August 9, 2013, the Company appealed the July 26 Order in Kansas Court of Appeals. On August 22, 2013, the Appeals Court granted the motion in part for a 60-day stay for the Annual Meeting. Following the dismissal on October 2, 2013 of the Company in the District Court of Johnson County case, the Appeals Court granted the motion to discontinue the stay after October 21, 2013.
In its proxy statement filed with the SEC on July 10, 2013, the Cray Group has disclosed that it will seek reimbursement for the costs and expenses associated with the proxy solicitation in the event that any of the Cray Group’s director nominees are elected to the Board of Directors of MGP, and intends to submit the issue of reimbursement to a vote of security holders. The Cray Group has estimated the total expenditures in furtherance of, or in connection with, the solicitation of proxies by the Cray Group to be approximately $650. This amount, inclusive of the above-mentioned attorneys fees and expenses, has not been reflected in the Company’s financial statements as we do not believe reimbursement is probable in occurrence.