Bankruptcy

PILGRIM?S PRIDE FILES CHAPTER 11 BANKRUPTCY CASE

By J. Michael McBride

The nation’s largest chicken producer, Pilgrim’s Pride, filed for Chapter 11 bankruptcy protection in the Northern District of Texas, Fort Worth Division, on December 1, 2008. The company is represented by the law firm of Weil, Gotshal & Manges of Dallas, and has been assigned to Judge D. Michael Lynn.

On December 3, 2008, Judge Lynn granted interim approval for the company to borrow up to $365 million to continue operations. According to company spokesman Ray Atkinson, the company plans to continue operations and reorganize, not liquidate its assets. A notice to “Pilgrim’s Pride Stakeholders” on the company’s website states that the company expects to conduct “business as usual” during the restructuring process.

The company’s problems stem from debt acquired in 2007 when it purchased its rival Gold Kist, as well as volatile feed prices and an oversupply of meat on the market. The Pittsburg, Texas-based company indicated that it had $3.75 billion in assets and $2.72 billion in debts. It controls about 23% of the U.S. chicken market and employs 48,000 people.

The company’s founder, Lonnie “Bo” Pilgrim, 80, has been a controversial figure in Texas politics for the last three decades. During the early 1980s, Pilgrim was appointed by Gov. Bill Clements to chair the state agency that oversaw water pollution enforcement. During that time, his company was accused of violating state water quality discharge standards but was never fined by the state.

According to the Houston Chronicle, “Pilgrim shocked the state in 1989 when he handed out $10,000 checks to nine state senators on the Senate floor during a committee hearing on worker’s compensation legislation that he supported because it would limit worker lawsuits. Poultry workers often suffer hand injuries. Public outcry over the incident led to the creation of the Texas Ethics Commission in 1991 as well as a ban on campaign contributions changing hands in the state Capitol.”

Here is a link to the full article and website:
www.chron.com/disp/story.mpl/business/6141828.html
www.pilgrimspride.com

Kathleen Munden

Full post as published by Texas Lawyer Blog on December 08, 2008 (boomark / email).