Agriprocessors files Chapter 11 bankruptcy to avoid lawsuit implications

By Caroline Salls

Pittsburgh, Nov. 5 - Agriprocessors, Inc. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Eastern District of New York.

According to an affidavit filed by president and sole shareholder Abraham A. Rubashkin, the bankruptcy case was filed on an emergency basis because of the implications of an impending lawsuit.

Rubashkin said First Bank Business Capital Inc. alleged in recent weeks that some receivables were misdeposited by the company into its operating account instead of a corresponding deposit account, "although all the funds at issue were used for payment of legitimate business purposes."

However, Rubashkin said the bank asked the district court in Iowa to appoint a receiver with expanded powers based on an alleged breach of loan covenants.

Rubashkin said the bankruptcy filing will stay the litigation and preserve the going-concern value of the company's business while it addresses issues with lenders and other creditors.

Rubashkin said the company's financial woes were caused by difficult circumstances involving a raid conducted by the Immigration and Custom Enforcement Agency on May 12, during which 389 of the workers at Agriprocessors' Postville, Iowa, facility were arrested and charged with or convicted on charges of possessing forged documents.

According to the affidavit, the company is actively seeking new sources of financing and it believes it will be able to restructure its overall business.

Agriprocessors listed $100 million to $500 million in assets and $50 million to $100 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more. However, Agriprocessors said its secured creditors include First Bank Business Capital Inc., St. Louis, with a $35 million claim; MetLife Agricultural Investments, Chicago, with a $9.6 million claim; and Farm Credit Leasing, Minneapolis, with a $6 million claim.

Agriprocessors is a Brooklyn, N.Y.-based kosher meat and poultry packer and food processor. Its Chapter 11 case number is 08-47472.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.