Recent news reports have brought “pink slime” to the attention of New Jersey consumers. When negative reports surface about a company, it can hurt its financial stability. On April 2, AFA Foods, a ground beef processor that distributes to retailers and fast-food markets in New Jersey said it was filing for Chapter 11 bankruptcy, seeking commercial bankruptcy protection while liquidating its assets.
Its bankruptcy was precipitated by a marked drop in business after negative media reports about an ammonia-treated meat filler, known as “pink-slime.” The company says it never relied on the boneless lean meat trimmings in question, but only used it according to the specifications of its customers. Company officials said the recent news reports and public issues over the meat filler have reduced industry-wide ground beef demand.
The company began selling its assets to keep its business alive in light of the “pink slime” news reports. It procured a loan for $56 million to bankroll its operations and keep selling products to its customers while the bankruptcy is pending. Three state governors have commented about the news reports and the meat processing companies, saying the media is overplaying the issue. Others have said “pink slime” is nothing more than a federal government scientist sharing his own personal opinion because he is personally offended by the product.
Consumer demand for beef products dropped off so much that the company needed the protection of the bankruptcy courts. By deciding to liquidate its assets through bankruptcy, the company has taken steps to protect itself from constant creditor demands while closing its business under an orderly, court-supervised commercial bankruptcy process. Businesses in New Jersey suffering from similar economic woes may also benefit from considering a similar approach to solve its financial problems and plan for a new beginning.
Source: New Jersey Herald, “AFA Foods files for Ch. 11, citing ‘pink slime’,” Candice Choi, April 2, 2012