CHARLES CITY, IOWA — Court documents confirmed that Pure Prairie Poultry Inc. filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the District of Minnesota.

Pure Prairie Poultry purchased the Charles City poultry processing facility in 2021. The plant was previously operated by Simply Essentials until 2019. Under Pure Prairie Poultry the operation began again in November 2022. 

George Peichel, chief financial officer for Pure Prairie, stated in court documents that in November 2023, Pure Prairie completed refurbishing the plant and capacity engaged in “secondary processing” capabilities which gave them a chance to manufacture a larger variety of poultry products.

However, the company said it experienced an operating loss of approximately $38 million from November 2023 until the present day. Court documents also show that the company’s estimated assets stood between $50 and 100 million, and its estimated liabilities were between $100 and $500 million.

The bankruptcy filing also listed the estimated number of creditors at 200-999. The court filing also lists debtors in Arkansas, Florida, Georgia, Illinois, Indiana, Minnesota and Wisconsin.

Pure Prairie currently has 138 full-time employees.

"The court's protections will enable the company to manage the sale process on an expedited basis while protecting the interest of employees, partners and other shareholders," Pure Prairie said in a statement to MEAT+POULTRY. "The company has received indications of interest in a going-concern sale and expects to solicit bits and soon reach a preliminary agreement. 

"The company will conduct normal business operations during the period of its restructuring. Employee pay will continue to arrive in full, benefits will remain in place, retirement accounts are intact and protected."

A separate motion to the court provided more details about the factors that led to the current financial situation. 

“Despite lacking the financial wherewithal to achieve full capacity, Pure Prairie sought to capitalize market forces and planned to roll-out the sale of whole chickens in November (2022),” Peichel said. “The hope was this staged rollout would provide a source of short-term bridge revenue while the company awaited the loan proceeds that would help it grow and refurbish the plant to full capacity. 

“Unfortunately, however, there was a substantial drop in poultry prices starting in the second week of October 2022. Prices remained depressed for approximately one year. This development did not stop Pure Prairie from beginning to sell whole chickens in November 2022. However, revenues derived from such initial sales efforts were disappointing.”

Pure Prairie Poultry received a $6.9 million grant from USDA’s Meat and Poultry Processing Expansion Program (MPPEP) that same month. The company also received a USDA loan for $38.7 million from the Food Supply Chain Guaranteed Loan Program (FSCGL). 

The USDA Rural Development marked the expansion of the Pure Poultry facility in July 2024.

The company confirmed that it obtained a committed debtor-in-possession (DIP) financing facility underwritten by Sandton Capital Partners. 

The company has obtained a committed debtor-in-possession (“DIP”) financing facility underwritten by Sandton Capital Partners. Subject to court approval, this DIP financing, combined with cash from operations, is expected to provide sufficient liquidity to support the company’s continuing business operations and to minimize any disruption during the reorganization process.