Updated November 06. 2008 7:27AM
A fresh start for Postville?
By Orlan Love

The Gazette
orlan.love@gazettecommunications.com




POSTVILLE - Members of this community expressed hope Wednesday that a new owner would salvage what's left of the once-high-flying kosher slaughterhouse Agriprocessors Inc., which a day earlier sought emergency bankruptcy protection from creditors.

"The best thing would be new owners," said Rev. Lloyd Ouderkirk, a retired priest at St. Bridget's Catholic Church, which has been ministering to and caring for workers and former workers at the Agriprocessors plant since May 12, when a federal immigration raid threw the town into turmoil.

"That would be best for all concerned," said Sharon Drahn, editor of the Postville Herald-Leader, which has been documenting the downward spiral of a company that lost nearly 400 workers in the raid, has been assessed more than $10 million in fines for alleged labor law violations and whose former top executive, Sholom Rubashkin, was arrested on federal charges related to assisting illegal immigration.

Blaming the raid for its financial plight, the supplier of kosher beef and poultry filed in New York under Chapter 11, which gives companies time to restructure their finances and continue operations. It did not specify where it will obtain financing to operate during bankruptcy, a key issue given tight credit markets.

The company "is seeking its new sources of financing and believes that it will be able to restructure its over- all business," the bankruptcy filing said.

Scores of Agriprocessors employees strolled around town Wednesday, while others stood in line at the local food bank. Some, like Rick Payne and Biff Howard, were optimistic about the company's future while others, like Moses Edwin, have already packed their bags.

Edwin, 22, of Koror, Palau, said he's leaving Friday to look for work in Colorado.

"I just don't feel secure about the job," he said.

Payne and Howard, both 50 and friends since childhood, said they were told Wednesday to report to work next week and that they still have jobs processing turkey.

"We'd like to see them keep going. We moved here to stay," Payne said.

Jack Shiro, 36, of Koror, Palau, a truck driver at Agriprocessors for the past six weeks, said he feels positive about keeping his job.

"They have a good plant, good products and a good market. They need to stay open." he said.

The bankruptcy filing is an attempt to keep First Bank Business Capital of St. Louis, which filed suit last week to call in a $35 million loan to Agriprocessors, at bay. The lawsuit sought a court order to place company assets securing the loan into the hands of a liquidation firm. By mutual agreement, the liquidation company on Friday was given limited authority to oversee assets.

A court hearing had been scheduled for Wednesday morning that could have given the liquidator more control as a court-appointed receiver, but the hearing was canceled because the bankruptcy halts collections by most creditors.

"It's a little like a homeowner filing a bankruptcy on the night before a sheriff's sale," said Joe Peiffer, a Cedar Rapids bankruptcy attorney who has no clients in the case.

Peiffer said the bankruptcy could take several different turns. The company could be sold to a new owner, generating funds that could help pay off creditors. Agriprocessors could stay in business, restructure its finances and pay off its debts over an extended period. Or the company could convert the bankruptcy into a Chapter 7 filing and go out of business, liquidating its assets to pay creditors.

"What is going to happen, nobody really knows right now," Peiffer said.

Agriprocessors listed liabilities of more than $50 million. The largest single debt was $845,389.82 owed to Jacobson Staffing, a Des Moines company that has provided it with temporary workers.

Paying off wage claims has a higher priority bankruptcy court than paying off other ordinary claims that are not secured by collateral. Peiffer said it's unclear, however, whether a temporary staffing company's claims will receive a preferred status.

Agriprocessors said its financial difficulties were caused by "difficult circumstances involving a raid conducted by Immigration and Custom (sic) Enforcement Agency on May 12, 2008, where 389 workers at the Postville facility were arrested and charged and convicted or (sic) possessing forged documents."

Agriprocessors also stressed urgency by saying that it is one of the largest kosher meat and poultry suppliers, and is instrumental in helping to maintain the national availability of kosher meat and poultry throughout the United States.

Before its recent legal problems, Agriprocessors had annual revenues of more than $300 million and about 1,000 employees, the bankruptcy filing said.

A creditors meeting has been set for Dec. 8 in U.S. Bankruptcy Court for the Eastern District of New York.


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