Kosher Iowa meatpacker seeks bankruptcy protection

Kosher slaughterhouse Agriprocessors has filed for bankruptcy court protection, blaming its financial difficulties on the May immigration raid on its Iowa plant in which more than 300 people were arrested.

Word that the plant in Postville could further reduce production or close prompted fear over a potential kosher food crisis.

The move to file for Chapter 11 bankruptcy protection Tuesday came as Agriprocessors faced a Wednesday hearing in federal court, where St. Louis-based First Bank was seeking to foreclose on the Postville plant and appoint a third party to oversee Agriprocessors' assets. The company owes First Bank at least $33 million.

But that hearing was canceled due to the bankruptcy filing.

Agriprocessors said it is "actively seeking new sources of financing," and thinks it can restructure.

The company's chief executive officer, Bernard Feldman, wouldn't comment Wednesday on the bankruptcy filing. The filing said Agriprocessors owes $50 million to $100 million to 397 secured and unsecured creditors.

Among the creditors is one of the plant's staffing firms, Jacobson Staffing, to which it owes $845,389.82. The Des Moines-based staffing company, which had served as the slaughterhouse's human-resources and recruitment arm, suspended its relationship with the company last week without giving a reason. The departure of the 450 Jacobson staffers left the company with about 250 workers.

Experts said Agriprocessors provided about 60 percent of the nation's supply of kosher meat, with most of that coming from the Postville plant. The company also operates a plant near Gordon, Neb.

"That's potentially devastating. What's worse, the Postville plant was supplying many smaller communities almost exclusively," said Joe Regenstein, a kosher food expert at Cornell University. "It had a unique distribution niche."

He said production at the plant has slowed so much in recent weeks that the impact is already being felt in smaller communities. Regenstein said the reduced supply also hurts urban Jewish communities, but they can more easily find other suppliers.

"It would have to take a major effort for someone to up their production," Regenstein said. "If they had the meat they could distribute it, but I'm not sure the infrastructure is in place for someone to step in and take over operation of the plant."

Rabbi Morris Allen of the Beth Jacob Congregation in St. Paul, Minn., said Jews throughout the country depend on Agriprocessors.

"It's a tragedy it's had to come to this," Allen said.

Allen said other suppliers will have to step up to fill the void left by Agriprocessors. And he echoed Regenstein's concerns about the impact on smaller communities.

---

Associated Press writer Michael J. Crumb in Des Moines contributed to this report.