WITH a shuttered beef processing facility as its only noteworthy asset, a federal trustee has asked the bankruptcy court to convert Northern Beef Packers' Chapter 11 case into a Chapter 7 liquidation.
In a petition filed last week, the trustee said the company is "administratively insolvent" and unlikely to obtain financing to resume operations.
Under voluntary Chapter 11 protection, a company is expected to reorganize its debt and emerge with a plan to repay creditors and resume operations, generally speaking. By calling for a Chapter 7 conversion, the trustee said resuming operations is unlikely, and the plant itself may be the only way creditors ever see money from the failed venture.
"Based on currently available information, it appears the plant represents the only asset by which the debtor may generate funds to pay creditors," trustee James Snyder wrote in his petition.
Northern Beef, based in Aberdeen, S.D., withdrew its previously filed financing plan and has not presented any alternative to its current situation. The company reported $138.8 million in liabilities and $79.3 million in assets. The plant dismissed its workforce and halted operations in July.
Reportedly working with Lincoln International to secure a buyer, little has been heard from the troubled firm in recent weeks. Originally locally owned, Northern Beef is now owned by a consortium of 69 Korean investors who each paid a minimum of $500,000 under a federal program that uses foreign investment in U.S. businesses as a precursor to securing permanent residency.