BIG NEWS: Distressed retail food brand files for Chapter 11 bankruptcy
According to The Street, Poultry producers have faced significant financial distress as fluctuating prices over the last two years proved to be the breaking point for many companies. The industry was riding high in July 2022, when poultry prices reached an all-time peak, but the optimism quickly faded as prices began to plummet just three months later.
Bankruptcy Filings: Cooks Ventures and Do Good Foods
Cooks Ventures, a chicken producer based in Decatur, Arkansas, was established in 2019 but shut down operations in late 2023. The company filed for Chapter 7 bankruptcy liquidation in the District of Delaware in April 2024, as reported by WattPoultry. Despite securing financing totaling approximately $62 million to expand its operations, it was not enough to keep the company afloat.
Another poultry producer, Do Good Foods from Bedminster, New Jersey, filed for Chapter 11 bankruptcy in June to reorganize its business while navigating the challenges of high interest rates and inflation, according to Food Dive.
Pure Prairie Poultry Enters Chapter 11
The latest poultry producer to encounter financial difficulties is Pure Prairie Poultry, which filed for Chapter 11 protection on September 20 in the U.S. Bankruptcy Court for the District of Minnesota. The company is seeking to restructure its business and remain operational, listing assets between $50 million to $100 million and debts ranging from $100 million to $500 million in its petition. Pure Prairie Poultry is also seeking up to $15 million in debtor-in-possession financing.
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Challenges Faced by Pure Prairie Poultry
Founded in December 2021, Pure Prairie Poultry acquired a poultry plant in Charles City, Iowa, and spent nearly a year refurbishing the facility before launching whole chicken production operations in November 2022. The company aimed to upgrade the plant to serve the premium and organic chicken retail market across six Midwestern states, including Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Currently, Pure Prairie Poultry sells its chicken products at 213 grocery stores in the Midwest, according to its website.
The company had secured a loan of approximately $39 million under the Federal Food Supply Chain Guaranteed Loan Program in April 2022 to help cover the costs of its plant upgrade. Initially, spirits were high as poultry prices soared in July 2022. However, prices began to decline in October 2022 and remained depressed for about a year. Around this time, the company received about $7 million in federal grant funds on October 20, 2022, intended as gap funding until the larger loan proceeds arrived.
Disappointing Sales and Operating Losses
Despite its ambitious plans, Pure Prairie Poultry’s sales fell short after opening the plant. The federal loan did not finalize until April 2023, and the plant refurbishment for expanded processing was not completed until November 2023. Once fully operational, the company began offering products beyond whole chickens, including breast fillets, tenders, thighs, drumsticks, and wings.
The delays in funding and refurbishments, from the plant acquisition in 2021 until full operations began in November 2023, significantly impacted the company. According to court documents, Pure Prairie Poultry reported a $38 million operating loss from November 2023 to the present. The company experienced liquidity issues, worsened by the delay in loan funding and the refurbishment of the plant, which postponed the launch of its expanded brand by nine months. Furthermore, Pure Prairie Poultry has struggled to secure alternative banking relationships to alleviate its financial burdens.
