Agriprocessors sale could finally come together

More than three months have passed since two companies holding millions of debt for Postville’s kosher meatpacking plant declined to accept the bids that were submitted during a court-allotted bidding process. Now, however, it looks as if there is an interested buyer who may have the blessing of key creditors.

Today Joseph Sarachek, the Chapter 11 bankruptcy trustee for the beleaguered Agriprocessors meatpacking plant, filed a supplemental motion requesting the court reconvene the auction to consider the sale of the plant to SHF Industries, Inc. The actual sale of the plant, although recommended by Sarachek, must be approved by both the bankruptcy court and federal prosecutors.

SHF Industries, incorporated in Iowa, is owned by Hershey Friedman, a Canadian businessman, and two additional partners. Prior to presenting an offer for the plant, SHF first approached two key debt-holders and was able to hammer out an agreement to purchase their interests, according to documents filed with the court. Earlier court proceedings listed the major debt interests at over $20 million, Sarachek told the Associated Press that the actual buyout was “significantly less.”

With the two key debt holders placated, however, it is much more likely that a bid for the plant will be successful.

Agriprocessors, the site of a massive immigration raid on May 12, 2008, never fully recovered when 389 workers were bussed out of town by more than 800 Immigration and Customs Enforcment agents. Federal prosecutors, once finished with the immigrant workers, began picking their way up the plant’s management team. The arrest of Sholom Rubashkin, a son of company founder A. Aaron Rubashkin, led to the Chapter 11 filing and the temporary closing of the plant.

SHF, according to court documents, is offering an “as is, where is” sum of $8.5 million in addition to what has already been invested in existing debt. SHF is also willing to allow the existing trustee continued access to records.

“The condition to closing is the entry of an order by the bankruptcy court authorizing the sale of the assests to SHF, free and clear of all claims, liens and other encumbrances. … SHF is not acquiring, nor assuming, any debts or obligations of the debtor or the estate.”

Finally, SHF, according to the motion filed by Sarachek, is willing to provide the court with an affadavit, “sworn under the penalty of perjury,” that establishes any connections or affiliations the company has either with existing creditors or other parties of intest in the case, including members of the Rubashkin family or any of the multiple corporations the family has created.

The sale needs the approval of federal prosecutors not only due to continued criminal investigations and charges against former plant operators, but because the sale, as described in court documents, would also include certain company trademarks — items the federal government have already marked for forfeiture.

More details regarding the offer should be forthcoming when Sarachek files an asset purchase agreement with the court prior to a continuance of the bankruptcy sale.