1 week Ago
Poultry producers have faced financial distress as fluctuating prices over the last two years was the breaking point for some of these companies. The industry was flying high in July 2022 when poultry prices hit an all-time high, but the euphoria was short-lived as prices began to plummet just three months later. Related: Troubled motor oil company files for Chapter 11 bankruptcy Decatur, Ark.
-based chicken producer Cooks Ventures, which was established in 2019, shut down operations in late 2023 and filed for Chapter 7 bankruptcy liquidation in the District of Delaware in April 2024, WattPoultry reported. The company had secured financing on a couple of occasions totaling about $62 million to expand operations, but it wasn't enough keep the company afloat. Another chicken producer, Bedminster, N.
J.,-based Do Good Foods, in June filed for Chapter 11 bankruptcy in the District of Delaware to reorganize its business as it navigates through an environment of high interest rates and inflation, Food Dive reported. The latest chicken producer to face financial distress and file for Chapter 11 protection was Midwest-based Pure Prairie Poultry, which on Sept.
20 filed its petition in the U.S. Bankruptcy Court for the District of Minnesota seeking to restructure its business and remain a going concern.
Pure Prairie poultry listed $50 million to $100 million in assets and $100 million to $500 million in debts in its petition. The debtor is seeking up to $15 million in debtor-in-possession financing. Pure Prairie Poultry Pure Prairie Poultry files Chapter 11 bankruptcy The debtor purchased its Charles City, Iowa, poultry plant in Dec.
2021 and spent nearly a year refurbishing and retrofitting the facilities before launching whole chicken production operations in November 2022, according to court papers. The company had sought to upgrade the plant to serve the branded and private label premium and organic chicken retail market in six Midwestern states, including Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. More bankruptcy stories: The company had qualified for a loan of about $39 million under the Federal Food Supply Chain Guaranteed Loan Program in April 2022 to help cover the expense of its plant upgrade, and spirits were high has poultry prices hit an all-time high in July 2022.
The company's goal was to initially roll out the sale of whole chickens in November 2022 and expand processing to other chicken products once it received federal funding. Related: Popular coffee and cafe company files for Chapter 11 bankruptcy Poultry prices, however, plummeted in October 2022 and would remain depressed for about a year. Around the same time as prices dropped, the debtor received about $7 million in federal grant funds on Oct.
20, 2022, which it planned to use as gap funding until it received the larger loan proceeds Pure Prairie Poultry's sales were disappointing after opening the plant, according to court papers, and the federal loan didn't close until April 2023. The company also didn't finish refurbishing the plant for expanded processing until November 2023. Once completed, the company began offering products other than whole chickens, including breast fillets, tenders, thighs, drumsticks and wings.
The delays in funding and refurbishments, from the plant acquisition in 2021 until full operations were underway in November 2023, took a toll on the company. The company reported a $38 million operating loss from November 2023 to present, according to court papers. The company had liquidity problems, and its financial problems were exacerbated by the delay in loan funding and refurbishment of the plant that prevented it from launching its expanded brand by nine months, court papers said.
The company has also been unsuccessful in securing alternative banking relationships. Related: Veteran fund manager sees world of pain coming for stocks.
