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December 18, 2009

Bankruptcy judge approves Pilgrim's Pride exit plan

A U.S. bankruptcy judge in Fort Worth on Thursday approved the exit plan for Pilgrim's Pride Corp., clearing the way for the poultry processor to become part of a giant Brazilian beef company.

"The past 12 months have been filled with tremendous challenges and unprecedented opportunities," Don Jackson, chief executive of the Pittsburg, Texas-based company, said in a statement.

"There have been a lot of tough, painful decisions made about the future of this company, yet our employees have joined together to create a new market-driven organization that is clearly focused on serving our customers."

Jackson was not available for further comment.

In September, Pilgrim's Pride agreed to sell 64 percent of the reorganized company to JBS USA Holdings Inc., the U.S. arm of São Paulo-based JBS, for $800 million in cash.

The company still must close on a deal to gain up to $1.75 billion in new financing and complete regulatory approvals.

Judge D. Michael Lynn also must rule on at least two matters, including the appropriate interest rate for some bondholders, said Jason Brookner, lead attorney for the company's unsecured creditors.

The company has said it hopes to exit bankruptcy by the end of the year.

Under the exit plan, Pilgrim's Pride said all creditors "holding allowed claims" will be fully paid – an unusual occurrence in bankruptcy.

"We got everything we asked for," Brookner said. The exit plan "provided a very, very good result for a lot of people."

Pilgrim's Pride is the successor company to a partnership that began in 1946 when Aubrey Pilgrim and his partner, Pat Johns, bought a feed and seed store in Pittsburg for $3,500. Aubrey's brother, Lonnie "Bo" Pilgrim, joined them and is now senior chairman of the board.

When it filed for bankruptcy protection on Dec. 1, 2008, Pilgrim's Pride was the nation's largest chicken processor, thanks to its purchase of rival Gold Kist Inc.

But that 2007 purchase also loaded the company with debt. As chicken feed prices soared and sales slumped, the company found itself swamped with liquidity problems.

Even after shedding processing plants during the bankruptcy, Pilgrim's still employs about 41,000 people, including 36,600 in the U.S. It operates processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico.

As of mid-2009, the National Chicken Council estimated it was "neck and neck" with rival Tyson Foods, each with about 20 percent of the market.

Sometimes, debt can be overwhelming, and bankruptcy becomes necessary.
Bankruptcy can sometimes be difficult. If you are considering bankruptcy, contact the Houston bankruptcy lawyers of Weston & Associates, PLLC at 713-623-4242

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