South American Beef, Inc., a frozen meats importer based out of West Des Moines, Iowa, has filed a petition with the Southern District Court of Iowa to receive Chapter 11 bankruptcy protections.
The company was founded in 1999 and sold products under vendor brands as well as its own Prairie Natural brand. Its specialty is in the purchase, import and sales of beef, lamb, goat, mutton, veal, seafood and poultry from a variety of countries, including Argentina, Australia, China, New Zealand, Uruguay and several countries in Central America. (Related: Meat prices will continue to rise for the next two quarters, warns US meatpacker.)
In its bankruptcy court filings, the company listed both its assets and liabilities as between $10 and $50 million and indicated that it has up to 99 creditors. South American Beef claimed it will be able to pay off its debts after dealing with its bankruptcy proceedings.
U.S. Bankruptcy Court Judge Anita L. Shodeen already agreed to South American Beef's first-day motion to honor pre-bankruptcy petition obligations to pay its employees and provide sales commissions. But she denied the company's request to use "cash collateral for payment of any expense items listed on the budget that would result in payment of a pre-petition obligation" owed by the company.
South American Beef owes several truckers and logistics firms
The company's top unsecured creditor is the Fort Myers, Florida division of Scotlynn USA, a transportation and logistics provider. It owes over $529,000 to this company.
South American Beef also owes money to Holt Logistics Corporation of Gloucester City, New Jersey, and TAFS Inc. of Houston, a transportation company. The company owes them nearly $102,000 and around $45,000, respectively.
The company also owes money to three subsidiaries of temperature-controlled logistics giant Lineage, headquartered in Novi, Michigan. South American Beef was able to get Lineage as a secured creditor with warehouseman's liens against the company's frozen food inventory for nonpayment.
South American Beef collectively owes around $346,000 to Lineage Logistics of Pasadena, California, Lineage Transportation of Dallas and Lineage Custom Brokerage of Tacoma, Washington.
JPMorgan Chase Bank of Chicago, another of South American Beef's secured creditors, has provided the company with a revolving line of credit amounting to more than $14.4 million. The bank said South American Beef has been in default on its loan obligations for more than a year.
When South American Beef was seeking options to refinance its debts or pursue alternative transactions that could address the meat importer's loan obligations to Chase Bank specifically, the bank continued to allow the company credit extensions.
But sometime before South American Beef filed for bankruptcy, Chase Bank stated the meat importer was no longer able to "fix its business issues, refinance its debt with Chase or sell its business."
"Instead, during the time the situation deteriorated further, as Chase learned of mismanagement and questionable business practices of South American Beef, in violation of its loan agreement," according to the bank.
Read more news about collapsing businesses at DebtCollapse.com.
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