Buyer takes on Agriprocessors’ line of credit

Somewhat mysterious news of alternate funding for Agriprocessors comes well beyond the one-week timeline originally presented to the court, but it still offers a glimmer of hope for an ultimate plant sale.

The plant, which filed for Chapter 11 bankruptcy last fall, has been operating under the auspices of Joseph Sarachek, a court-appointed bankruptcy trustee, and with the help of a line of credit provided by St. Louis-based First Bank Business Capital, a company that was already owed more than $30 million by the meatpacking company.  Potential bankruptcy sales stalled in late March after two days of mediation when bids were determined too low by existing credit holders. The circumstance prompted First Bank to announce that it was no longer interested in providing a line of credit to keep the plant in limited operation during the course of the proceedings.

“We, perhaps more than anyone, have contributed to the effort to find real-life value for this estate in addition to our pre-petitioned debt,” Lloyd Palans, attorney for First Bank, told the court during the March discussions.

The company that has agreed to purchase the $10 million line of credit and keep the plant in operation remains a secret, according to a report filed today by the Associated Press.  In addition, Sarachek would not disclose how much was paid by the undisclosed company to take on the debt. Sarachek did say, however, that the company was willing to take this step because it is “presumably” interested in ultimately purchasing the plant.

Agriprocessors, once of the nation’s largest producers of kosher meat, never fully recovered from a May 2008 immigration raid that led to the detention of roughly half its workforce. Although it had previously been a producer of kosher beef and poultry, production lines since the bankruptcy have been limited to chicken.

Members Rubashkin family, owners of the Agriprocessors plant and other interests in and around Postville, have also filed Chapter 11 bankruptcy for several property management companies. Sholom M. Rubashkin, son of company founder A. Aaron Rubashkin, has been charged with numbers state and federal offenses. Several additional members of upper and lower plant management have also been charged, primarily on immigration-related offenses.