“Chapter 11 Bankruptcy: Retail Food Brand Struggles Amid Financial Distress”
According to The Street, Poultry producers have recently faced significant financial distress as fluctuating prices over the last two years have become the breaking point for some companies. The industry experienced a surge in July 2022 when poultry prices hit an all-time high, but this euphoria was short-lived, as prices began to plummet just three months later.
Cooks Ventures and Do Good Foods File for Bankruptcy
Decatur, Ark.-based chicken producer Cooks Ventures, established in 2019, shut down operations in late 2023 and filed for Chapter 7 bankruptcy liquidation in the District of Delaware in April 2024. The company had secured financing on multiple occasions totaling about $62 million to expand its operations, but it wasn’t enough to keep the business afloat.
Another chicken producer, Bedminster, N.J.-based Do Good Foods, filed for Chapter 11 bankruptcy in June in the District of Delaware to reorganize its business while navigating an environment of high interest rates and inflation, according to Food Dive.
Pure Prairie Poultry Files Chapter 11 Bankruptcy
The latest chicken producer to face financial distress and file for Chapter 11 protection is Midwest-based Pure Prairie Poultry, which submitted its petition on September 20 in the U.S. Bankruptcy Court for the District of Minnesota. The company is seeking to restructure its business to remain operational.
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Pure Prairie Poultry listed its assets between $50 million and $100 million and its debts between $100 million and $500 million in its petition. The company is also seeking up to $15 million in debtor-in-possession financing.
Background on Pure Prairie Poultry
The company acquired its Charles City, Iowa, poultry plant in December 2021 and spent nearly a year refurbishing and retrofitting the facilities before launching whole chicken production operations in November 2022. The goal was to serve the branded and private label premium and organic chicken retail market in six Midwestern states: Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.
Currently, Pure Prairie Poultry sells its chicken products at 213 grocery stores in the Midwest. The company had qualified for a loan of approximately $39 million under the Federal Food Supply Chain Guaranteed Loan Program in April 2022 to help cover the expenses of its plant upgrade. Spirits were high as poultry prices reached an all-time high in July 2022.
Challenges Faced by Pure Prairie Poultry
Unfortunately, poultry prices plummeted in October 2022 and remained depressed for about a year. Around the same time, the debtor received about $7 million in federal grant funds on October 20, 2022, which it planned to use as gap funding until larger loan proceeds were received. However, Pure Prairie Poultry’s sales were disappointing after the plant’s opening, according to court papers, and the federal loan didn’t close until April 2023.
The company also did not finish refurbishing the plant for expanded processing until November 2023. Once completed, Pure Prairie Poultry began offering products beyond whole chickens, including breast fillets, tenders, thighs, drumsticks, and wings.
The delays in funding and refurbishment—from the plant acquisition in 2021 until full operations were underway in November 2023—took a toll on the company. According to court documents, Pure Prairie Poultry reported a $38 million operating loss from November 2023 to the present.
