Agriprocessors U.S. trustee gets green light to appoint Chapter 11 trustee

By Jennifer Lanning Drey

Portland, Ore., Nov. 18 - Agriprocessors Inc.'s U.S. trustee obtained court approval to appoint a Chapter 11 trustee to oversee the company's bankruptcy case, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of New York.

Agriprocessors and lender First Bank Business Capital, Inc. agreed to the trustee appointment in connection with the company's motion seeking emergency use of cash collateral, according to the filing.

When requesting the appointment, U.S. trustee Diana G. Adams said Agriprocessors has been unable to manage its financial affairs, while its treatment of workers does not appear to be consistent with federal or state law.

Specifically, the trustee said Agriprocessors' president and sole shareholder, as well as its former chief executive officer, currently face charges by the Iowa attorney general's office with 9,311 criminal counts resulting from violations of Iowa's child labor laws.

The trustee also said federal authorities have arrested and charged the former CEO with violating federal immigration and fraudulent identification statutes.

Additionally, she noted that immediately before Agriprocessors filed for bankruptcy, the company's primary secured creditor alleged Agriprocessors had diverted at least $1.3 million in funds that constitute collateral proceeds.

Agriprocessors, a Brooklyn, N.Y.-based kosher meat and poultry packer and food processor, filed for bankruptcy on Nov. 4. Its Chapter 11 case number is 08-47472.

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