Fresno based poultry producer Zacky Farms has filed for Chapter 11 bankruptcy protection, citing the high cost of grain the company uses for feed.
The 70 year old firm is the second largest poultry company in California and employs around 1,500 workers. The company filed its petition in U.S. Bankruptcy Court in Sacramento on Monday.
The company released a statement saying that it "has been under severe stress due to historically high corn and soybean meal prices." A drought throughout much of the Midwest has caused grain prices to rise in recent months.
Zacky officials say that the bankruptcy filing will not affect normal business operations, including customer service, sales, order processing and delivery. The company has secured so-called "debtor in possession" financing from the Lillian Zacky Family Trust, which will allow it to continue operations during the re-organization.
Keith Cooper, Zacky's chief restructuring officer issued the following statement:
"After careful consideration we concluded that a Chapter 11 restructuring represents the best long-term solution for Zacky. We appreciate the ongoing loyalty and support of our employees, growers, customers and vendors. Their dedication and hard work is critical to our success. We remain committed to leading Zacky toward a strong and profitable future with the help of our employees, our growers, our customer base, and our vendor community. Zacky remains a viable business that is deeply committed to our employees and the customers that we serve."
According to BusinessWeek, the company's largest creditors include Western Milling of Goshen, which it owes $6.6 million, and Foster Farms of Livingston, which it owes $1.2 million. The company owes creditors as much as $100 million.