US-based poultry processor Zacky Farms has filed for bankruptcy protection and is seeking to sell itself in order to pay $100m debts owed to its creditors.
The company, which has been affected by high feed costs due to a drought in the US, has listed assets worth $100m.
According to the documents filed in US Bankruptcy Court in the Eastern District of California, Zacky Farms' largest unsecured creditors are Western Milling, a feed company, and Foster Farms, a poultry producer, to which the company owes about $6.6m and $1.2m respectively.
Meanwhile, Zacky Farms said that the normal operations and customer service will continue during the bankruptcy period, reported Reuters.
The company noted that historically high corn and soybean meal prices have led to operating losses, which have eliminated its liquidity and working capital in its chicken and turkey operations.
According to court papers, the company has to borrow $71m at an interest rate of 6% in order to continue operations during bankruptcy, and requires funds to pay for the feed used by the contract farmers to raise poultry.
The loan, which must be cleared by the bankruptcy court, will require an immediate initiation of the process to sell Zacky Farms.
Currently, the company spends about $1.8m a week on feed for 1.9 million turkeys and 600,000 chickens.
Zacky Farms supplies chicken and turkey products to grocery stores and companies in the foodservice sector.
The company employs about 1,500 people in Fresno, Los Angeles, Tulare, Kings and San Joaquin counties in Southern California, and produces its own feed and operates a distribution fleet.
