Pure Prairie Poultry: Seven-Day Chapter 11 and Plant Shutdown

Pure Prairie Poultry, Inc. filed for chapter 11 on September 20, 2024 in the U.S. Bankruptcy Court for the District of Minnesota and sought emergency financing to keep its Charles City, Iowa processing plant operating while it pursued a sale process. Within a week, the debtor asked to dismiss the case after lenders objected to a priming lien structure that was required for the proposed DIP facility, and the court entered a dismissal order on September 27, 2024. filed for chapter 11 petition dismissed

The filing followed a short operating history at a recently refurbished plant and a funding stack that included USDA-backed financing and private debt. Local reporting described the Charles City facility as a major regional employer and said the plant ceased processing on October 2, 2024, after the company told Iowa officials it could not afford feed. plant stopped processing Oct. 2 The shutdown led to animal welfare complications across the supply chain and prompted state and federal officials to issue public updates on depopulation efforts and the use of federal funds. state update on depopulation USDA funding scrutiny

Debtor(s)	Pure Prairie Poultry, Inc.
Court	U.S. Bankruptcy Court, District of Minnesota
Case Number	24-32426
Judge	Hon. Katherine A. Constantine
Petition Date	September 20, 2024
Assets	$50 million to $100 million (petition estimate)
Liabilities	$100 million to $500 million (petition estimate)
DIP Facility	Proposed $15 million Sandton DIP (not approved)

Restructuring attempt and dismissal

The case began as a short-form restructuring aimed at stabilizing liquidity and running a sale process. The debtor filed a package of first-day motions seeking authority to use cash collateral, pay wages, continue utilities, maintain insurance, and preserve cash management arrangements. The centerpiece was a proposed $15 million DIP facility from Sandton Capital Solutions Master Fund VI, LP that would have funded immediate working capital and sale milestones if the court granted priming liens and superpriority status. Court filings indicate the facility contemplated an initial draw to repay Packers and Stockyards Act obligations, additional draws upon entry of a final DIP order and bidding procedures order, and a 90-day maturity with extension mechanics tied to milestones.

The filings also said a shutdown would likely result in the loss of more than 138 jobs, reinforcing the debtor's argument that emergency relief was needed to keep the plant operating and maintain feed purchases while a sale process was pursued.

The proposed financing structure drew objections from Community Bank & Trust, SouthStar Financial, and multiple agricultural cooperatives that asserted liens on accounts receivable or feed inventory. Those objections led the debtor to file an expedited motion to dismiss on September 25, 2024, stating it could not obtain priming liens required by the DIP and did not have liquidity to maintain operations or insurance coverage. The motion also warned that without financing the company could be forced to depopulate as many as two million chickens tied to its production system. objections blocked the DIP

The dismissal motion included a short-term cash forecast that showed negative operating cash flow even with planned collections. The debtor projected about $3.2 million in cash collections over the next six weeks, about $11 million in revenue over thirteen weeks, and negative cash flow of about $10.8 million during the first six-week period. The motion also cited at least $5.5 million of immediate expenditures needed to stabilize operations. Those projections were central to the debtor's conclusion that a stand-alone chapter 11 case without a priming DIP was not viable.

DIP financing terms (proposed). The DIP motion described a facility of up to $15.0 million with a 20% PIK interest rate, a $375,000 issuance fee, and an unused fee. The maturity was the earliest of a sale closing, a plan effective date, an event of default, or 90 days after the initial draw, with a possible 90-day extension for a fee. The proposed budget and milestones were built around obtaining a final DIP order within 28 days, a bidding procedures order within 45 days, and a sale closing within 100 days. Those terms were never approved because the required priming liens were not granted.

The financing package was designed to bridge the case to a sale process rather than fund a long reorganization. The first draw was tied to immediate working capital needs and the repayment of Packers and Stockyards Act obligations, while later draws depended on court approval of a bidding procedures framework. The milestones in the DIP budget effectively set a sale calendar that would have required the debtor to obtain auction procedures within about six weeks and close a transaction within roughly three months. In the motion to dismiss, the debtor said those timelines could not be met without priming financing because it lacked the liquidity to cover feed purchases, vendor payments, and payroll while the sale process unfolded.

Outcome. The dismissal order ended the chapter 11 case after seven days. The case did not advance to a bar date order, a disclosure statement, or a sale process order, and the debtor shifted to non-bankruptcy paths to resolve creditor claims.

First-day motions and operating continuity

The first-day motion package focused on keeping the Charles City plant running long enough to stabilize operations and preserve the company's sale process options. The debtor sought authority to pay prepetition wages and benefits, continue workers' compensation programs, maintain insurance coverage, and preserve existing utility arrangements. It also requested authority to keep its existing cash management system and bank accounts, and to pay prepetition sales and use taxes. In the filings, those requests were tied directly to the need for uninterrupted operations and the ongoing purchase of feed and other inputs.

Those operating motions were paired with requests for procedural relief. The debtor sought an extension of time to file schedules and statements of financial affairs and asked the court to extend the automatic stay to protect officers and directors while the company attempted to keep operations intact. The company also filed a notice of intent to seek an expedited hearing, and the court scheduled a hearing for September 27, 2024, the same day it heard and granted the motion to dismiss.

The docket also reflected the administrative setup of a typical chapter 11 case. The debtor applied to retain Epiq Corporate Restructuring, LLC as claims and noticing agent to manage service of process and claims administration. A meeting of creditors was scheduled for October 21, 2024, but the case was dismissed before it could occur. With the case ending in late September, the court never entered a bar date order or other claims administration deadlines.

Supply chain stakeholders and feed liens

The company's supply chain depended on contracted growers and feed suppliers, and those stakeholders were central to the DIP disputes. Court filings listed several agricultural cooperatives asserting input liens tied to feed deliveries. Those liens covered feed delivered to birds already in production and became one of the most contested components of the collateral package for the proposed DIP.

The debtor also listed mechanics liens arising from the plant refurbishment, including a $1.13 million lien from The Waldinger Corporation and a $1.36 million lien from Henkel Construction. Those liens, together with the USDA-backed loan mortgage and other secured claims, made priming liens a central point of conflict in the DIP motion.

Industry coverage said Community Bank & Trust objected to the proposed DIP and would not subordinate its claim without USDA approval, a position that contributed to the financing impasse. bank would not subordinate without USDA approval The company's growers were also directly affected by the shutdown. A Fox 9 report said nearly 50 farmers were left with more than two million chickens without feed or processing options after the plant closed. farmers affected by shutdown

USDA-backed financing and capital structure pressures

Pure Prairie's capital structure included USDA-supported financing intended to fund a plant refurbishment and a regional launch. The debtor said it qualified in April 2022 for a Food Supply Chain Guaranteed Loan Program facility of nearly $39 million. On October 21, 2022, USDA publicly announced a $38.72 million loan guarantee and a $6.963725 million Meat and Poultry Processing Expansion Program grant. The debtor began drawing on the grant in January 2023 and closed the guaranteed loan on April 26, 2023. USDA funding announcement The company later faced questions from lawmakers about the oversight of that funding after the plant shutdown. lawmakers demanded USDA responses

The USDA-backed loan was issued through Community Bank & Trust and carried a fixed 9.75% interest rate with interest-only payments until May 2025. As of June 29, 2024, filings listed an outstanding balance of about $33.4 million on the facility. The loan, together with Bremer Bank and shareholder debt, formed a secured capital structure that limited the debtor's flexibility once working capital pressures intensified.

The debtor reported that a six-month delay in receiving USDA loan funds and completing plant renovations led to a nine-month delay in its broader product launch because of seasonal retailer windows. It also reported about $38 million in operating losses from November 2023 to the petition date and said Bremer Bank declined to increase a line of credit from $7.5 million to $12 million in early 2024. Those liquidity constraints pushed the company toward short-term financing and revenue purchase agreements at higher cost.

The capital structure included multiple layers of security interests and statutory liens: Community Bank & Trust held a first-priority construction mortgage on the plant, Bremer Bank held a first-priority lien on a broad collateral package, and several agricultural cooperatives asserted input liens tied to feed deliveries. Mechanics lien claims were filed by construction contractors related to the refurbishment. The debtor also listed vehicle financing liens and a factoring arrangement tied to accounts receivable.

Revenue purchase agreements. Court filings listed several revenue purchase agreements executed in mid-2024 that advanced cash in exchange for percentages of revenue. The debtor disclosed a July 2024 agreement with Family Funding Group and a July 2024 agreement with Dynasty Capital, followed by two August 2024 agreements with ACE Funding Source and an August 2024 agreement with Liquidity Access. The agreements were structured as purchases of future receivables with fixed remittance targets, and the debtor stated that the validity and perfection of those liens were disputed. The CFO served as guarantor for those agreements and for vehicle financing obligations.

The filings described these revenue purchase agreements as additional secured claims layered on top of the USDA-backed loan and other liens. That structure left the debtor with a dense collateral stack and limited remaining unencumbered assets, which in turn complicated the priming lien request that was needed to close the proposed DIP facility.

Creditor landscape and what dismissal meant for the case

The creditor mix combined traditional secured lenders, USDA-backed loan structures, shareholder mortgages, and statutory liens from the agricultural supply chain. Community Bank & Trust held the construction mortgage associated with the USDA-backed FSC loan, Bremer Bank held a separate first-priority lien package, and shareholder Michael Helgeson held a mortgage that was subordinated to CB&T. The debtor also identified mechanics liens from refurbishment contractors and input liens from feed suppliers, alongside vehicle financing liens and revenue purchase agreement claims.

This layering of liens shaped the trajectory of the case. The proposed DIP required priming liens that would have sat ahead of existing secured claims, but the debtor could not secure the necessary consent. Coverage at the time reported that CB&T objected to the priming structure and said it would not subordinate its claim without USDA approval. bank would not subordinate without USDA approval With objections from CB&T and cooperatives in place, the debtor concluded it could not access the postpetition funding required to keep the plant operating.

The dismissal order ended the bankruptcy before the case could move into a traditional claims and plan process. A meeting of creditors had been scheduled for October 21, 2024, but the case was dismissed on September 27. The docket does not reflect a bar date order, a disclosure statement, or a sale order. As a result, creditor recoveries and asset disposition shifted to state law and negotiated resolutions rather than a chapter 11 plan framework.

Operations, growers, and the Charles City plant

Pure Prairie's operating model was built around a regional supply chain centered on a single plant in Charles City, Iowa. The company described a "know your food" branding strategy with chickens fed a 100% vegetable diet, no antibiotics, and 100% air chilling. It contracted with about 50 growers who raised birds under that program and held equity stakes in the company. The plant produced whole birds in late 2022 and added secondary processing by November 2023, after a refurbishment period following an earlier shutdown by a prior owner in 2019.

Court filings said the company began selling products in November 2023 and, by the petition date, had distribution in regional grocery stores and food markets across Minnesota, Iowa, North Dakota, South Dakota, Missouri, and Nebraska. The company also reported a capital structure with both common and preferred equity outstanding and a shareholder base that included growers, reflecting a model that tied on-farm production to the processing and marketing platform. The plant had been idle for more than two years before the company acquired it in December 2021, and filings noted that a portion of the workforce displaced by the prior owner's 2019 shutdown later became employees of the debtor.

Regional outlets reported on the filing and the plant's role in the local economy. Coverage from KCHA News in Charles City described the bankruptcy as a major local development for the community. local bankruptcy coverage The Sioux City Journal also reported the chapter 11 filing and the impact of the plant on the regional poultry supply chain. regional coverage

Local reporting said the company hoped to build the plant up to 500 employees but was operating at around 150 before the bankruptcy filing. plant employment plans The same reporting said the company notified Iowa officials on September 30, 2024 that it could not afford feed, and the plant stopped processing on October 2, 2024. The closure led to layoffs for production workers and caused supply disruptions for growers whose birds no longer had a processing outlet. plant closure and layoffs

The plant's shutdown also created spillover issues in the local community. A local television report said the company owed Charles City about $500,000 in unpaid utility bills, a figure city leaders said represented about three months of charges. unpaid utility bills That liability sat outside the bankruptcy case after dismissal, and it became part of the broader local response to the plant's closure.

Animal welfare fallout and state response

The abrupt shutdown left large numbers of broiler chickens without a processing outlet. State and local coverage described depopulation activity across multiple Iowa farms, and the Iowa Department of Agriculture confirmed that depopulation began on October 17, 2024 and involved about 1.3 million birds across 13 farms, using methods consistent with American Veterinary Medical Association guidelines. Iowa Department of Agriculture update

Regional outlets reported that more than one million chickens were euthanized after the plant closure, and state officials described the effort as a response to the sudden loss of a processor for birds already in the production cycle. over one million chickens euthanized 1.3 million chickens reported A Fox 9 report said nearly 50 farmers were affected and that more than two million chickens were left without feed or processing options after the shutdown. farmers affected by shutdown

Local reporting later described legal and logistical hurdles that slowed depopulation efforts, including court-related issues that delayed access to some farms. The Charles City Press reported that the state eventually culled more than one million broiler chickens and linked the delays to legal roadblocks connected to the closure. state culls reported

The animal welfare fallout underscored how the business model depended on continuous processing capacity. Once the plant stopped, the supply chain could not re-route production quickly enough, leading to depopulation on farms that had contracted to supply the company's branded program.

Public funding scrutiny and political response

The bankruptcy and plant closure drew scrutiny because the company received federal support intended to expand domestic processing capacity. A press release from Representative Derrick Van Orden said the company received $45.6 million in USDA-backed funding and called for accountability after the bankruptcy filing. USDA funding scrutiny

The Iowa Capital Dispatch reported that lawmakers from Iowa, Minnesota, and Wisconsin sent a letter to USDA raising concerns about oversight of the funding, with Senator Chuck Grassley quoted as saying USDA "dropped the ball." lawmakers' letter The company's USDA-backed loan and grant were designed to support plant refurbishment and expansion, and the questions focused on how quickly the company moved from receiving federal support to entering a short-lived bankruptcy.

USDA Secretary Tom Vilsack later defended the agency's investment and said the program was meant to increase competition in meat processing. A regional report summarized his comments in response to the criticism following the closure. Vilsack response

Asset disposition after dismissal

Because the chapter 11 case was dismissed, asset disposition moved to state-court processes. The Charles City Press reported that in May 2025 a Minnesota court approved a sale of the company's assets to secured creditors via credit bids, including a $25.7 million bid from Community Bank & Trust and a $2.1 million bid from shareholder Michael Helgeson for certain personal property. The report said the plant remained closed after the sale. credit bid sale approved

The asset sale did not restart production, and the regional impact continued to be shaped by the loss of a processing outlet for growers and local employment. That outcome is consistent with the debtor's dismissal motion, which stressed that, without immediate financing, it could not fund operations or maintain insurance coverage during the chapter 11 case.

Frequently Asked Questions

What is Pure Prairie Poultry and where is it based?

Pure Prairie Poultry was a Minnesota-based company that operated a chicken processing plant in Charles City, Iowa and sold branded poultry products in regional grocery markets. Local coverage described the Charles City plant as the company's primary operating facility. Charles City plant coverage

When did Pure Prairie Poultry file chapter 11 and which court handled the case?

The company filed chapter 11 on September 20, 2024 in the U.S. Bankruptcy Court for the District of Minnesota. filed on September 20, 2024

Why was the chapter 11 case dismissed after one week?

The debtor said it could not obtain the priming liens required for its proposed DIP financing and lacked liquidity to keep operating or maintain insurance coverage. Secured lender objections to the DIP motion prompted the debtor to seek dismissal on September 25, 2024, and the court granted the request on September 27, 2024. DIP objections and dismissal

Was any DIP financing approved?

No. The debtor proposed a $15 million postpetition financing facility from Sandton Capital Solutions Master Fund VI, LP, but the court did not approve the DIP because the required priming liens were not obtained.

What happened at the Charles City plant after the filing?

Local reporting said the plant stopped processing on October 2, 2024 after the company informed Iowa officials it could not afford feed, and production workers were laid off. plant stopped processing layoffs reported

How many chickens were euthanized following the shutdown?

The Iowa Department of Agriculture reported that about 1.3 million broiler chickens were depopulated across 13 farms, with depopulation beginning on October 17, 2024. Iowa Department of Agriculture report

What federal funding did the company receive?

Public statements and reporting said the company received $45.6 million in USDA-backed funding, including a loan guarantee and a grant tied to federal programs aimed at expanding meat processing capacity. USDA funding amount

What happened to the assets after dismissal?

A Minnesota court approved a 2025 credit-bid sale of the company's assets to secured creditors, including a $25.7 million bid by Community Bank & Trust and a $2.1 million bid by Michael Helgeson for certain personal property. credit bid sale

Was a claims bar date set in the bankruptcy case?

No. The case was dismissed on September 27, 2024, before a bar date order or claims administration schedule was entered.

Who were the primary secured lenders and lienholders?

Court filings listed Community Bank & Trust (USDA-backed construction mortgage), Bremer Bank (first-priority lien on a broad collateral package), and shareholder Michael Helgeson (mortgage subordinated to CB&T) among the primary secured creditors. The filings also identified mechanics liens from plant contractors and input liens from agricultural cooperatives that supplied feed.

Who is the claims agent for Pure Prairie Poultry?

Epiq Corporate Restructuring, LLC served as the claims and noticing agent. The firm maintained the official claims register and distributed case notifications to creditors and parties in interest.

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