Allen Family Foods Inc., a poultry producer almost 100 years old, has announced its bankruptcy, plans to sell all assets and closures in three states, as reported by The News Journal from Delaware.
The Chapter 11 filing was made on June 9.
The bankruptcy plans include the sell off of corporate-owned grow-out farms and maintaining only a small, yet to be determined, number of employees.
Allen Family Foods employs approximated 2,400 workers in Delaware, Maryland and North Carolina.
The company was known for processing about 1.6 million birds a week and grossing $380 million in annual revenues.
Mountaire, another poultry processing company, announced that they will absorb some the Allen employees as they now, due to the bankruptcy announcement, expect to increase operations.
Mountaire's newly formed affiliate, Seaford Milling Co., is purchasing Allen - the price is undisclosed - and expects to process an additional 400,000 birds weekly.
Mountaire has not announced how many employees they will take on, or what their plans are for Allen facilities.
Per Keith Cooper, the chief restructuring officer, Allen will close immediately upon the sale - expected to occur late July. Employees, growers and suppliers will be paid by debtor-in-possession financing.
Cooper stated that $82 million is owed in secured debt to farm credit banks, with the most due to Mid-Atlantic Farm Credit Bank. $500,000 of the bank debt is owed to Wilmington Trust.
Cooper stated that Allen suffered with "significant operating losses" due to severe stress in both corn and soybean prices.
Also noted by Cooper was the "sagging chicken prices caused by an oversupply of broilers".
In regards to the response from Allen employees, Cooper said, "It's a bit of a shock."
Allen sold off its production complex in Hurlock, Md., last year and while they expanded operations in Harbeson.
The Chapter 11 filing allows Allen to sell remaining assets and pay down secured debt. The filing, supervised by Bankruptcy Court, will keep the company free of liens and other debt.
Bankruptcy Court will also supervise the sale, set a deadline for bids and approve final bidding results.
Mountaire said they have agreed to purchase "All of the inventory, hatcheries, feed mill, breeder operations, rendering operations and production assets of Allen Family Foods Inc., Allen Hatchery Inc. and JCR Enterprises Inc."
Upon approval of the offer, Chief Executive Officer Dave Pogge said that Mountaire will "commence operations as soon as possible."
Mike Tirrell, Mountaire's vice president of human resources and business services said, "Mountaire intends to expand, regardless of if the transaction is approved. The timing might be different, but we plan to expand."
State representatives had stated that they are "extremely disappointed" by the bankruptcy filing, as they felt that Allen was "a pillar of the community."
Growers, and employees, have already been told to start the search for new contracts and new jobs as the new owner cannot guarantee them anything.
In regards to the growers, Tirrell said, "All growers have priority. ... We are adding [production] lines and we are adding equipment. And we need additional growers to support that, so the news is, Mountaire's hiring."
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