*AFA Foods, a ground beef processor owned by Los Angeles private equity firm Yucaipa Cos. and Magic Johnson filed a bankruptcy petition seeking protection from creditors, blaming, in part, bad publicity over products containing so-called pink slime.
The companysaid it sought bankruptcy protection because it was “faced with an immediate and unanticipated liquidity crisis” and was unable to pay vendors last week without a loan, which banks refused to provide.
The company, straining with too much capacity and heightened competition, was struggling to post a profit when sales began to fall sharply because of “an unfounded public outcry over the use of boneless lean beef trimmings,” or BLBT, Ron Allen, its interim chief executive, wrote in a court declaration.
According to reports, the seven-facility company is struggling at this point, with stiff competition and the recent outrage over the so-called pink slime produt. It’s anticipated that one of its locations will be closed down, laying off numerous employees.
The company said it supplies beef to major retailers, such as Safeway and Wal-Mart Stores, and fast-food outlets, including Burger King, Jack in the Box, Carl’s Jr. and Wendy’s. In its petition, filed U.S. Bankruptcy Court in Delaware, AFA listed assets of $219.6 million and debts of $197.3 million. Last year’s revenue, it said, was $958 million.
Read the full story at the Palm Beach Post.