More LFTB fallout: AFA files for bankruptcy
April 2, 2012
by Meat&Poultry Staff
KING OF PRUSSIA, Penn. – AFA Foods, a ground beef processor, announced the company filed for Chapter 11 bankruptcy, citing recent changes in the market for ground beef and the impact of the controversy over lean finely textured beef (LFTB). AFA is a competitor of Beef Products Inc., another producer of LFTB that has been the subject of recent media attention over the process used to produce the product used to make ground beef more lean.
“As an industry leading ground beef processor, AFA Foods brings significant value to customers, suppliers and potential buyers based on our long-standing customer relationships, robust product offering and proven focus on quality and safety,” said Ronald Allen, interim chief executive officer of AFA Foods. “We believe an orderly sale through Chapter 11 will allow us to unlock this value and provide a smooth transition for our employees, customers and other business partners.”
The company filed for bankruptcy in the District of Delaware so that AFA could sell some or all of its assets. AFA also said the company received $56 million in debtor-in-possession (DIP) financing from GE Capital and Bank of America to fund ongoing operations. In a press release, the company said:
“In conjunction with the filing, AFA filed First-Day Motions with the court to ensure the timely payment of employee wages and benefits, maintain its customers’ promotional programs and complete a smooth transition into operating under the protections of Chapter 11. The company expects to continue purchasing goods and services from its suppliers and to pay suppliers in the normal course for all goods and services delivered on or after today’s filings, while claims for goods and services delivered prior to the filings will need to be addressed through the Chapter 11 process. The company hopes to maintain as many of its supplier relationships as possible.”