Due to the escalating costs of chicken feed, California-based chicken producer Zacky Farms, LLC, has filed for bankruptcy protection in U.S. Bankruptcy Court in Sacramento, as reported by Bloomberg Businessweek and several other media outlets.
Zacky Farms, a closely held company, has plans to pay off its creditors approximately $100 million in debt if they are able to sell the company.
Cited for the company's spiraling downfall is the increased cost of chicken feed.
The Chapter 11 filing was made on October 8 and reports Zacky Farms assets at $100 million. The two largest unsecured creditors include Goshen-based Western Milling at $6.6 million and Livingston-based Foster Farms LLC at $1.2 million.
A statement released by Zacky Farms officials read, "Normal operations and customer service will continue without disruption" and that the company has suffered "severe stress due to historically high corn and soybean meal prices."
Both Zacky Farms' turkey and chicken businesses have experienced "significant operating losses" since the increased price of feed.
Due to the droughts in the U.S., South America and Russia, according to the tracking conducted by the United Nations, global food prices have increased the cost of animal feed. This change in pricing, according to financial-services provider Rabobank International, has caused meat and dairy farmers be forced to reduce their herds.
On August 10 the Chicago Board of Trade showed that the price of corn was a record $8.49 a bushel. The blame for the price was credited to the worst draught that the U.S. has experienced in 56 years.
The main ingredient in livestock feed is corn.
The United Nations – in gauging 55 food items – reached its six-month high this past September.
Court documents show that Zacky fed 1.9 million turkey and 600,000 chickens at the cost of $1.8 million per week. In April Zacky borrowed $7 million from the Robert D. Zacky and Lillian D. Zacky trust in an effort to stall the bankruptcy.
The Zacky trust accounts for half of Zacky's ownership, the remaining half is owned by other Zacky family members related to Albert Zacky.
According to the filing, to operate in bankruptcy Zacky must secure a loan of $71 million at a 6 percent interest rate.
The company stated that the debtor-in-possession loan is going through the Lillian Zacky Family Trust. The loan will need to be approved by U.S. Bankruptcy Judge Thomas Holman. According to court documents the loan requires "the commencement of an immediate process to sell the company as a going concern."
According to the Zacky Farms website, the company began with Samuel Zacky, an immigrant from Kiev, who opened a live-chicken store in Los Angeles in 1928. By 1979 the company had capability to process over 1 million birds per week in their Fresno plant.
If you believe that you are headed into bankruptcy, whether for your business or personal debts, contact a bankruptcy attorney to help you. An experienced bankruptcy attorney will help you protect your assets and plan for your future.