According to The Street, Over the past two years, retail food brands have faced significant economic challenges, driven by inflation, rising interest rates, and other industry-related factors. Companies across the sector have struggled to maintain profitability amid these headwinds. One notable example is Leroux Creek Food, an organic canned fruit and vegetable company, which filed for Chapter 11 protection in August as it worked to reorganize its debts and overcome financial difficulties.
Poultry Industry Hit by Declining Prices
While inflation has impacted many sectors, the poultry industry has faced financial hardships due to declining prices, rather than rising costs. In October 2022, poultry prices plummeted, triggering widespread distress. This decline resulted in bankruptcy filings for several companies, some of which were forced to shut down operations altogether.
One prominent case is Cooks Ventures, a Decatur, Ark.-based chicken producer that ceased operations in late 2023. The company filed for Chapter 7 bankruptcy liquidation in April 2024 in the District of Delaware after struggling to stay afloat. Despite securing about $62 million in financing to expand operations, the company was unable to remain in business.
Pure Prairie Poultry Bankruptcy and Shutdown
Another significant impact was felt by Pure Prairie Poultry, a fresh chicken producer based in Charles City, Iowa. On October 2, 2024, the company unexpectedly ceased operations and laid off all of its plant employees after a bankruptcy judge dismissed its Chapter 11 case on September 27. The company’s co-owner, George Piechel, stated that efforts to restart operations on a limited basis had been unsuccessful. Without a viable operating plan, the company was forced to discontinue operations.
Pure Prairie Poultry had filed a motion on September 25 to dismiss its Chapter 11 case after its secured creditor, Community Bank and Trust (CB&T), objected to a $15 million debtor-in-possession (DIP) financing proposal. Without CB&T’s consent, the company was unable to secure the loan it needed to continue operations. As a result, Judge Katherine A. Constantine dismissed and closed the bankruptcy case.
Also read: Troubled motor oil company files for Chapter 11 bankruptcy
Company’s History and Financial Struggles
Pure Prairie Poultry purchased its Charles City plant in December 2021 and spent nearly a year upgrading the facility before launching production in November 2022. The company aimed to cater to the branded and private label premium organic chicken market in six Midwestern states, including Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. It sold its products in 213 grocery stores across the region before ceasing operations.
The company qualified for a $39 million loan under the Federal Food Supply Chain Guaranteed Loan Program in April 2022, hoping to cover the costs of its plant upgrades. Although poultry prices hit a record high in July 2022, the market quickly declined in October, putting further financial strain on the company.
Delays in Federal Funding and Bankruptcy
Despite receiving $7 million in federal grant funds in October 2022 to help bridge the financial gap, Pure Prairie Poultry faced delays in securing the larger loan it needed. The loan finally closed in April 2023, but by then, the company’s financial situation had worsened. The refurbishment of the plant wasn’t completed until November 2023, leaving the company without the necessary resources to survive the prolonged period of low poultry prices.
Ultimately, the combination of declining prices, delayed funding, and operational challenges forced Pure Prairie Poultry to close its doors and seek either a sale of its assets or an out-of-court restructuring solution.
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