A bankruptcy attorney has recently complied with the wishes of a U.S. bankruptcy trustee in converting a business Chapter 11 into a Chapter 7 liquidation, according to sources close to the case. The company is a meat processing plant based in South Dakota, Northern Beef Packers; according to the bankruptcy attorney, the trustee determined that the company was not fit to continue doing business after looking over the financial statements provided in the Chapter 11 filing. As a result, the trustee strongly opined that Northern Beef Packers would be better off liquidating their company assets under Chapter 7 than attempting a corporate restructuring under Chapter 11.
Chapter 7 Best Option
The plant has been something approaching a fiasco since its inception in 2006; the company obtained nearly $110 million to purchase land and build the plant, but it was not operational until six years later, and never came close to meeting its production schedules. At the time of the filing, financial statements show liabilities nearly doubling assets; the company has fired the great majority of its workers and has stopped production.
Chapter 7 liquidation, according to the bankruptcy attorney, would allow for the sale of the plant to cover a portion of the debts, and another packing company would be able to step in and operate the plant. This would be best both for the community in South Dakota, which would gain back the jobs it has lost through the plant’s inefficiency, and for Northern Beef Packers’ ownership group, consisting mostly of Korean investors, who would be able to walk away from what has thus far amounted to a financial disaster.