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About 25 people who signed up for the John Crow Farm CSA for this season may face a second disappointment after a bankruptcy filing: little or no return of their investment.

About 25 people who signed up for the John Crow Farm CSA for this season may face a second disappointment after a bankruptcy filing: little or no return of their investment.

A farm-share business that collapsed in April, leaving hundreds of Boston-area shareholders without the food deliveries they paid for, may generate some cash after all, but none of it is likely to go to the customers. Instead, the paltry assets will almost certainly be used to pay a Bankruptcy Court trustee and her law firm for their work in the farmer’s bankruptcy case.

When Robert Varisco, co-owner of John Crow Farm in Groton, closed the farm and filed for bankruptcy April 10, about 350 shareholders, including about 25 in Cambridge, were owed approximately $165,000 for meat, poultry and vegetables they bought in advance but didn’t get, according to Varisco’s Bankruptcy Court filings.

Varisco, of Fitchburg, who said in court papers he was being supported financially by his girlfriend, had already sold off his livestock to pay a small amount of what he owed to his major creditor, an arm of the U.S. Agriculture Department, which loaned $207,000 to the farm and its two owners in 2011. And there was only an estimated $82,000 in farm equipment, which was pledged to the government agency.

Legal, not unusual

Now the trustee, Boston attorney Anne White, has persuaded the Agriculture Department to allow her to sell the equipment and keep a small part of the proceeds – $5,000 as of now – for the “bankruptcy estate,” a June 12 filing by White says. The “estate” includes creditors, but the amount is so tiny that all of it is likely to be used up by her legal expenses, White acknowledged in an interview Tuesday. White, who as trustee represents the interests of creditors, has hired her own law firm to represent her in the case, which is not unusual and is legal as long as the law firm has no connection to parties in the bankruptcy.

Asked who would benefit from the sale deal she worked out, White said the farm’s landlord would benefit by having the sold equipment removed from the land so he can rent it to another tenant; the “secured lender” – the Agriculture Department – would get part of the sale proceeds; and “there will be a benefit to the local community not to have that land strewn with items.”

“Unfortunately there are administrative costs in doing this – accountants, lawyers,” White said. Although it appeared Varisco had no assets, “I didn’t feel it was appropriate not to try” to find some cash, she said.

In most of her bankruptcy cases, White said, there is no money to pay administrative costs such as legal work. In those cases she gets $60, she said.

The sale must be approved by a Bankruptcy Court judge; a hearing is scheduled in Worcester on July 10.

Shareholders don’t know

John Crow Farm was one of a growing number of community-supported agriculture operations, known as CSAs, that have sprung up to satisfy consumers who want fresh, local food. CSAs work by having people pay in advance for a certain number of monthly deliveries; this helps farmers with upfront costs such as seeds and fertilizer and guarantees revenues. Agriculture industry officials said they hadn’t heard of any Massachusetts CSA going bankrupt before, and that consumers should feel confident in continuing to buy shares.

About 35 John Crow Farm customers complained to the state Attorney General’s Office, which has a lawyer monitoring the bankruptcy. Some of the CSA shareholders set up a Facebook page, What Happened to John Crow Farm?, to try “to figure out what happened” and help each other to get repaid, the page says. In posts, some of the shareholders expressed anger and others resignation. Some said they managed to recoup some or all their money from credit card companies or Paypal. Posts about the proposed sale indicate that shareholders don’t know that the proceeds will probably be used for legal expenses.

So far White has found three buyers who have offered a total of $10,889 for 34 items, including greenhouses, an irrigation system, poultry crates, an 11-year-old van and an eight-year-old truck, both with more than 100,000 miles on them. She is seeking higher bids for those items and is looking for bidders for another 21 pieces of equipment, including even older vehicles, a walk-in freezer and a tractor.

Under the agreement with the Agriculture Department, the bankruptcy estate will keep $5,000 plus 20 percent of any proceeds from the additional items, and 20 percent of any extra money from higher bids for the initial list of items. White said she is “very hopeful” she will get more bids.

What remains

After the bankruptcy estate gets its share, Varisco will be entitled to half of the money from the sale of certain vehicles; under bankruptcy law he could have claimed 100 percent but agreed to take less, White said in her filing. The farm’s co-owner, Aidan Davin, who is not involved in the bankruptcy, has agreed to give up his right to any proceeds.

The remaining money will go to the Agriculture Department. A spokeswoman previously said the agency wouldn’t comment; it’s not known how much is still owed on the loan.

White said she expected Varisco to be freed of his debts when the case is closed, which means none of his creditors can sue him for debts incurred before the bankruptcy was filed. It isn’t clear whether Varisco personally owes any money to the CSA shareholders or whether they are creditors of John Crow Farm, the corporation. In any case, they are unlikely to get anything from the bankruptcy.

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