AgFeed USA Files for Chapter 11

On July 15, 2013, AgFeed USA, LLC, AgFeed Industries, Inc. and certain of their affiliates (collectively, the Debtors or AgFeed) filed their voluntary petitions under Chapter 11 of the Bankruptcy Code, seeking to sell their assets under section 363 of the Bankruptcy Code through an open auction process with approximately $79 million as a floor price set forth under an asset purchase agreement between AgFeed and The Maschhoffs, LLC (the Buyer).

AgFeed is the leading hog producer in the United States.  In 2012, the Debtors’ gross revenue based on the US business operations was approximately $244 million. The Debtors’ Chapter 11 filing was precipitated by, among other things, (a) civil and criminal investigations related to certain accounting irregularities, which were discovered by the Board of Directors of AgFeed in 2011; (b) ongoing litigation with Hormel Foods Corporation (Hormel), which resulted in a net arbitration award of $7.9 million against AgFeed; and (c) expiration of the Debtors’ term loan (with a current principal balance of $8.4 million) and revolving loan (with a current principal balance of $60.1 million) with Farm Credit Services of America, FLCA (the Lenders), which matured on February 1, 2013.

In March 2013, the Debtors began robust and aggressive marketing efforts, which resulted in the execution of an asset purchase agreement on July 15. The asset purchase agreement provides for a floor price against which other interested parties may bid at an open auction. Through the Chapter 11 process, the Debtors intend to consummate a going concern sale of all of their assets to maximize value of their bankruptcy estates for all interested parties.

A meeting of general unsecured creditors interested in serving on the creditors committee is scheduled for July 23, 2013 at 10:00 am in Wilmington, DE.