The kosher meat company Agriprocessors has defaulted on a $35 million loan, leading a St. Louis bank to foreclose on the company's assets.
Agriprocessors shut down major portions of its slaughter operations at the same time that the company's former CEO was arrested and the state of Iowa imposed a $10 million fine on the meat producer.
If the foreclosure proceedings move forward, it would appear that they would force Agriprocessors out of business. On October 31, a U.S. District Court judge in Cedar Rapids, Iowa, appointed a temporary receiver for Agriprocessors' assets. The judge also set a hearing date of November 5 in the case.
Representatives of the company, once the largest kosher meat producer in the nation, could not be reached for comment.
The foreclosure proceedings against Agriprocessors, which has its primary production facilities in Postville, Iowa, were initiated in a lawsuit filed by First Bank of St. Louis on October 30. The bank calls for a third party to liquidate the company's assets immediately.
The lawsuit was filed on the same day that Sholom Rubashkin, the son of Agriprocessors owner Aaron Rubashkin, was arrested and charged with helping to procure false identification for undocumented immigrants who worked at the Postville slaughterhouse. A day before that, the company was hit with nearly $10 million in fines, which the Iowa labor commissioner issued in response to the alleged failure of the company to pay proper wages to its employees.
Agriprocessors was the subject of a massive immigration raid in May, which has caused a cascading spiral of financial problems at the company. Agriprocessors is based in Brooklyn but has most of its operations in the Midwest. Until the raid, the company was America's largest supplier of kosher beef and kosher poultry. The raid came two years after an article in the Forward raised concerns about the treatment and pay of workers at the plant.
According to the lawsuit, Agriprocessors and its owners took out a $35 million loan and put up as collateral "virtually all of their personal property." Both Sholom Rubashkin and Aaron Rubashkin are named defendants in the lawsuit, and the bank alleges that both gave personal guaranties for the loan.
First Bank alleges that during the last month checks written by the company for over $1 million were returned due to insufficient funds.
The bank requested that the court put all of Agriprocessors' assets under control of a receiver because of the danger that the assets could lose their value. The lawsuit alleges that Agriprocessors' electricity will be shut off on November 3 due to unpaid bills.
"The termination of electric service could result in the spoilage of millions of dollars in fresh and frozen meat products," the lawsuit states. "In addition, First Bank is informed and believes the millions of chicks and chickens in the Borrowers' inventory are in danger of starving to death."
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