The 35 investors claim the plant did not have adequate financing. The lawsuit also alleges that officials misrepresented the plant as a financially sound investment. Named in the lawsuit are SD Investment Fund LLC 6, SRDC Inc. and the state’s economic development agency.
Northern Beef Packers opened for seven months in 2013, but struggled to acquire financing to operate at full capacity. The processor eventually filed for Chapter 11 bankruptcy. Based on court documents, the plant had $138.8 million in liabilities and just $79.3 million in assets.
In 2013, federal investigators launched an inquiry into the processor’s finances and a federal immigration program behind the funding for the plant. SDRC is the private company tasked with soliciting foreign investors under the federal EB-5 program which encourages foreign investment in exchange for qualifications to secure permanent residency. At least 70 investors in South Korea each paid at least $500,000 under the EB-5 program. Some of the investors now say their investments were made based on materially false representations about the plant, according to the lawsuit.
The plant is now owned by San Francisco-based White Oak Global Advisors, which bought the firm out of bankruptcy for $44.3 million in 2013.