Updated: Northern Beef Packers files for bankruptcy
by Meat&Poultry Staff
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ABERDEEN, SC – Northern Beef Packers filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of South Dakota. Rory King, an attorney in Aberdeen, SD, broke the news to a local television station about the filing, and the company later issued a news release.
The company said a business reorganization would give the company more time and interim working capital to complete its restructure. The company negotiated a debtor-in-possession financing facility with secured lenders and other parties. Upon court approval, the DIP financing and any cash generated from business operations will go toward paying operating expenses.
“For the last several months we have been working to secure a strategic equity investment to move our business into the next phase of production,” said David Palmer, CEO of Northern Beef. “Due to the size and importance of this investment, the process is taking longer than what was originally expected. At the same time, the beef packing industry has been experiencing some of its worst processing margins in recent decades, causing expected start-up costs to be much higher than anticipated. This has significantly reduced our cash position and is preventing us from meeting our current obligations.”
“Today, the company is taking a significant step towards remedying this situation and we expect the DIP financing will allow us to accomplish our restructuring goals,” Palmer added.
This latest setback followed a July 17 announcement that employee paychecks would be delayed. The company attributed the problem to "ongoing delays with securing additional funding."
In April, Northern Beef Packers announced temporary layoffs for 108 of its 420 employees while the company raised money to buy more cattle.