SD beef plant seeks financing to avoid liquidationAn idled South Dakota beef processing plant is making another attempt at financing an auction sale in an attempt to prevent its bankruptcy case from moving toward liquidation.
By: Associated Press,
SIOUX FALLS, S.D. — An idled South Dakota beef processing plant is making another attempt at financing an auction sale in an attempt to prevent its bankruptcy case from moving toward liquidation.
Northern Beef Packers is asking a federal bankruptcy judge to allow it to borrow $2.25 million from White Oak Global Advisors so it can hire investment banking firm Lincoln International to market and sell the 420,000-square-foot facility in Aberdeen.
A preliminary hearing is scheduled for Thursday.
Lincoln would look for a “stalking horse” bid, in which one potential buyer makes an initial offer to set the floor for an auction that invites competitive bids.
In its petition filed last week, Northern Beef said the plan offers the best chance “to resume operations and restore jobs to the community.”
Northern Beef Packers opened its $109 million state-of-the-art facility on a limited basis in 2012 after years of delays. But its owners filed for Chapter 11 bankruptcy protection less than a year later saying they didn’t have enough money to buy cattle to slaughter.
Judge Charles Nail denied Northern Beef’s initial request for post-petition on Aug. 8, prompting the company to withdraw its financing plan.
With no replacement motion filed, Assistant U.S. trustee James Snyder asked the court to change the case to a Chapter 7 liquidation to protect the interests of creditors and the estate and to prevent further delay and default.
White Oak is the only party offering financing terms that will allow the case to remain under Chapter 11 protection, Northern Beef said.
“The Debtor and the Committee believe that the only plausible alternative to the financing proposed herein and in the Stipulation would be conversion to chapter 7,” the company said in its petition.
Northern Beef since its 2012 opening has struggled to reach anywhere near its production target of 1,500 head per day. Workers were harvesting about 200 head per day from April through June, but those levels didn’t generate enough cash to pay off debt or fund ordinary operations, the company said.
With $138.8 million in liabilities and just $79.3 million in assets, according to court documents, the plant laid off most of its employees and halted production.
Northern Beef wants the auction held by Dec. 3 with the sale to close by Dec. 27.