MORE FALL OUT OVER LFTB, AFA Foods Going Chapter 11  
 
KING OF PRUSSIA, Penn. – AFA Foods, a ground beef processor, announced the company filed for Chapter 11 bankruptcy, citing recent changes in the market for ground beef and the impact of the controversy over lean finely textured beef (LFTB). AFA is a competitor of Beef Products Inc., another producer of LFTB that has been the subject of recent media attention over the process used to produce the product used to make ground beef more lean.

“As an industry leading ground beef processor, AFA Foods brings significant value to customers, suppliers and potential buyers based on our long-standing customer relationships, robust product offering and proven focus on quality and safety,” said Ronald Allen, interim chief executive officer of AFA Foods. “We believe an orderly sale through Chapter 11 will allow us to unlock this value and provide a smooth transition for our employees, customers and other business partners.”

The company filed for bankruptcy in the District of Delaware so that AFA could sell some or all of its assets.
AFA Foods said it secured $56 million in financing from its lenders to fund operations and expects to continue serving customers throughout the process.
 
The outcry over lean finely textured beef has has real consequences for other businesses. Last week, the governors of three states toured a plant of Beef Products Inc., the main processor of cheap lean beef, and criticized the media for scaring consumers with a moniker coined by critics.
BPI suspended operations at its plants in Texas, Kansas and Iowa last week because of the controversy, affecting 650 jobs.
The politicians who toured the plant - Texas Gov. Rick Perry, Brownback, Iowa Gov. Terry Branstad, Nebraska Lt. Gov. Rick Sheehy and South Dakota Lt. Gov. Matt Michels - agreed with the industry view that the beef has been unfairly maligned and mislabeled and issued a joint statement earlier saying the product is safe.
Critics say the "pink slime," a term coined by a federal microbiologist who was grossed out by the product, is an unappetizing example of industrialized food production.


“In conjunction with the filing, AFA filed First-Day Motions with the court to ensure the timely payment of employee wages and benefits, maintain its customers’ promotional programs and complete a smooth transition into operating under the protections of Chapter 11. The company expects to continue purchasing goods and services from its suppliers and to pay suppliers in the normal course for all goods and services delivered on or after today’s filings, while claims for goods and services delivered prior to the filings will need to be addressed through the Chapter 11 process. The company hopes to maintain as many of its supplier relationships as possible.”