Zacky Farms bankrupt, cites 'extremely difficult liquidity crisis'

By Caroline Salls

Pittsburgh, Oct. 9 - Zacky Farms, LLC filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Eastern District of California.

The company said in its bankruptcy petition that it has "recently faced an extremely difficult liquidity crisis caused in large measure by the price of feed for its birds."

As a result, Zacky Farms said it is unable to pay its debts as they arise.

The only lender willing to provide funds to the company on an emergency basis required the Chapter 11 filing and the protections afforded by a debtor-in-possession facility, the petition said.

In conjunction with the bankruptcy filing, Zacky Farms requested court approval of a proposed $71 million DIP facility from The Lillian Zacky Family Trust.

The facility will mature on Jan. 31, 2013.

Interest will be 6%.

The DIP agreement requires Zacky Farms to immediately begin a process to sell the company as a going concern.

According to court documents, Zacky Farms has $50 million to $100 million in both assets and debt.

The company's largest unsecured creditors are Western Milling of Goshen, Calif., with a $6.57 million claim and Foster Farms LLC of Livingston, Calif., with a $1.17 million claim.

The company is represented by Thomas A. Willoughby.

Zacky Farms is a Fresno, Calif.-based poultry producer. The Chapter 11 case number is 12-37961.

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