Agriprocessors could face extinction

Agriprocessors, the failing giant of the kosher food industry, is beginning to disintegrate.

Joseph Sarachek, a court-appointed bankruptcy trustee currently in charge of the Agriprocessors plant in Postville, is seeking to make the company more attractive to potential buyers. Sarachek told residents there that he plans to reopen the facility’s poultry production lines as early as next week. Other kosher food producers are strategically positioning themselves to buy the company’s operations.

The Postville plant, which has not been at full operation since a May 12 immigration raid, was once the nation’s largest supplier of kosher meat products. Placing the plant back in production is important to those who have an interest in selling the operation. Obviously, a plant that is up and running with a trained and loyal work force is more appealing than one that is defunct.

Sarachek outlined his plans with civic and community leaders prior to the Thanksgiving holiday. He said he would begin by opening only the poultry production line, but beef production could also be in the plant’s future. Sarachek was hopeful that the bankruptcy judge will approve the move. He indicated that First Bank, a creditor owed $35 million by Agriprocessors, was in favor of the move.

Bernard Feldman, a New York attorney who was named this September as the company’s chief executive, told the New York court hearing the Chapter 11 bankruptcy case that discussions with possible buyers are under way. Feldman said he hopes the plant will have new ownership in the near future.

Sarachek told The Des Moines Register that Agriprocessors owes more than $500,000 in back pay to workers, and that he plans to begin repaying those debts to the 170 workers he will re-hire to work at the plant next week.

Former chief executive Sholom M. Rubashkin remains behind bars, awaiting trial on a litany of charges that include multimillion-dollar bank fraud, document falsification and immigration-related charges. At least seven other members of plant management, as well as the corporate entity itself, are also either facing charges or have pleaded guity to charges.

The bankruptcy filed by Agriprocessors owner Abraham Aaron Rubashkin on Nov. 4 continues to work its way through the court in New York. Several creditors, including the Iowa labor commissioner, have requested the case be moved to Iowa. A judge is expected to rule on the change of venue within the next two weeks.

Competitors have already positioned themselves into the void created during Agriprocessors’ legal woes.

Empire Kosher Poultry announced that it would “significantly expand production” of kosher chicken on Nov. 24, increasing its output by 50 percent. The company, while obviously hoping to grab the market share vacated by Agriprocessors, said in a press release that it hoped the increase would “allay any fear of a widespread kosher poultry shortage.” It was the second increase in production for Empire during 2008.

Greg Rosenbaum, chairman and chief executive of Empire, made note not only of the cooperation of kosher certifying agencies in announcing the production increase, but made a special point of praising the United Food and Commercial Workers Union. The praise came on the heels of the U.S. Supreme Court denial to hear a 2005 case involving Agriprocessors’ refusal to bargain with workers at its Brooklyn distribution facility who voted to join UFCW. Agriprocessors had unsuccessfully argued to the National Labor Relations Board and a U.S. Court of Appeals that since many of those who voted to unionize were undocumented workers, it didn’t have to honor the decision.