Struggling chicken producer files for Chapter 11 bankruptcy

Poultry producers have faced financial distress as fluctuating prices over the past two years was the breaking point for these kind of companies.

The industry was flying high in July 2022 when poultry prices hit an all-time high, nonetheless the euphoria was short-lived as prices began to plummet just three months later.

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Decatur, Ark.-based chicken producer Cooks Ventures, which was established in 2019, shut down operations in late 2023 and filed for Chapter 7 economic ruin liquidation contained within the District of Delaware in April 2024, WattPoultry reported. The corporate had secured financing on a couple of occasions totaling about $62 million to enlarge operations, nonetheless it wasn't enough keep the company afloat.

Every other chicken producer, Bedminster, N.J.,-based Do Good Foods, in June filed for Chapter eleven economic ruin contained within the District of Delaware to reorganize its business as it navigates through an environment of high interest rates and inflation, Food Dive reported.

Essentially essentially the most modern chicken producer to face financial distress and file for Chapter eleven protection was Midwest-based Pure Prairie Poultry, which on Sept. 20 filed its petition contained within the U.S. Economic ruin 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 $five hundred million in debts in its petition. The debtor is seeking as much as $15 million in debtor-in-possession financing.

Pure Prairie Poultry files Chapter eleven economic ruin

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 corporate had sought to upgrade the plant to serve the branded and private label top rate and organic chicken retail market in six Midwestern states, including Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota.

The corporate currently sells its chicken products at 213 grocery stores contained within the Midwest, according to its web page online.

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The corporate had qualified for a loan of about $39 million less than 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 corporate's goal was to on the starting place roll out the sale of whole chickens in November 2022 and enlarge processing to other chicken products once it received federal funding.

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Poultry prices, nonetheless, plummeted in October 2022 and would remain depressed for approximately a year. Across the identical time as prices dropped, the debtor received about $7 million in federal grant funds on Oct. 20, 2022, which it planned to make use of 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 corporate also didn't finish refurbishing the plant for expanded processing until November 2023. Once completed, the company began offering products as opposed to 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 corporate reported a $38 million operating loss from November 2023 to present, according to court papers.

The corporate 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 9 months, court papers said. The corporate has also been unsuccessful in securing alternative banking relationships.

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