Pure Prairie Poultry, Inc. Bankruptcy Case

Pure Prairie Poultry, Inc.'s Chapter 11 case was dismissed on September 27, 2024, seven days after the debtor filed its voluntary petitionDkt. 1, after secured-creditor objections defeated a proposed DIP financing package and the debtor abandoned its restructuring effort.

The Minnesota corporation operated a poultry processing plant in Charles City, Iowa, serving Upper Midwest grocery markets with antibiotic-free, vegetable-fed, air-chilled whole-bird and secondary processing. Distress traced to roughly $38 million in operating losses between November 2023 and September 2024, a six-month USDA Food Supply Chain loan funding delay that pushed the product launch past seasonal retailer windows, and Bremer Bank's early-2024 refusal to increase a $7.5 million line of credit to $12 million (first-day motionDkt. 11). The prepetition capital stack was anchored by a $36.3 million USDA-guaranteed construction mortgage held by Community Bank & Trust on the Charles City plant and a $17.1 million subordinated shareholder mortgage held by board chairman Michael Helgeson, supplemented by a $1.55 million SouthStar factoring facility and approximately $3.5 million in disputed merchant-cash-advance obligations whose lien validity the debtor contested.

At filing, the debtor sought combined DIP financing and cash-collateral authority to run a sale process and retained Lakeshore Food Advisors as investment banker (application to employ Lakeshore Food AdvisorsDkt. 16). Community Bank & Trust and SouthStar Financial objected to the cash-collateral motion, withholding consent to priming liens that the proposed Sandton Capital DIP required. Unable to secure financing, the debtor moved for expedited dismissal, which Judge Katherine Constantine granted on September 27, 2024. The Charles City plant closed on October 2, 2024.

The court dismissed Pure Prairie Poultry’s Chapter 11 one week after filing, ending the case before first-day relief could stabilize operations. The debtor said its restructuring depended on a $15 million senior secured DIP from Sandton Capital Solutions Master Fund VI, LP, but the financing required Bremer Bank and Community Bank & Trust to subordinate their liens; CB&T refused and said it would object, leaving the debtor without funding for operations or insurance Expedited Motion to Dismiss.

The liquidity failure was immediate: Pure Prairie projected roughly $10.8 million of negative cash flow over six weeks and at least $5.5 million of near-term expenditures needed to steady operations. The debtor warned that absent dismissal it could be forced to destroy as many as 2 million chickens and could not safely maintain the estate. Judge Katherine A. Constantine granted dismissal effective September 27 and ordered the case closed Dismissal Order.

Pure Prairie Poultry, Inc.

Pure Prairie Poultry, Inc.

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Chapter 11 dismissed after Sandton DIP falls apart

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