Northern Beef Packers could go Chapter 7
The tale of woe continues for the financially troubled, technologically stunning Northern Beef Packers’ (Northern) plant in Aberdeen, SD. The Trustee overseeing the bankruptcy case has called the packing plant “administratively insolvent” and has moved for the plant to liquidate.
Assistant U.S. trustee James Snyder filed a petition last Wednesday to convert Northern’s bankruptcy from Chapter 11 to Chapter 7. While Chapter 11 bankruptcy is a strategy to allow businesses to reconsolidate and organize themselves with the expectation of continued business, Chapter 7 involves the liquidation of assets.
“Based on currently available information, it appears the plant represents the only asset by which [Northern] may generate funds to pay creditors,” Snyder wrote.
According to bankruptcy documents, Northern currently has $138.8 million in liabilities and only $79.3 million in assets. Snyder however believes the company is unlikely to ever meet its original plans of processing 1,500 cattle a day. His petition was also based on the documented “unauthorized use of cash collateral substantially harmful to [one] or more creditors.”
Some investors and South Dakota officials hold out hope that a group will put in a bid for the plant. Many have said it is the most technologically advanced, state-of-the-art plant in the U.S. and the additional packing capability would be a boon to local ranchers and cattle feeders. — Kerry Halladay, WLJ Editor