Cagle’s, Inc. announced this week that it and its wholly-owned subsidiary Cagle’s Farms, Inc. has filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. Cagle’s filed the petitions on Wednesday in the U.S. Bankruptcy Court for the Northern District of Georgia in Atlanta.
In an affidavit filed with the court, the company said that, over the past three years, the cost of feed ingredients increased to record amounts while the price of poultry products decreased significantly due to the historic economic downturn and oversupply in the industry. This combination of high input costs and lower pricing resulted in significant operating losses for the company that have depleted its liquidity and working capital position. The company told the court that as of July 2 and on a consolidated basis, assets totaled $92 million and total liabilities were in the sum of $63 million and that Chapter 11 protection was needed because of deteriorating market conditions resulting in the company losing as much as $3 million per month.
Cagle’s said that normal operations and customer service will continue without disruption, including sales, order processing, and delivery. Included among the first day motions was a motion seeking bankruptcy court authority to continue the use of cash collateral and to obtain post-petition secured loans equal to $6 million in debtor-in-possession funding from AgSouth Farm Credit.
“After careful consideration we concluded that a Chapter 11 restructuring represents the best long-term solution for Cagle’s, Inc and Cagle’s Farms, Inc.,” said J. Douglas Cagle, chairman, president, and chief operating officer. “It is our goal to reach an agreement with our creditors in a quick and efficient manner, allowing us to restructure our debt with minimal disruption to our operations.”
Cagle’s, headquartered in Atlanta, Georgia, has been in operation for over sixty years. The company has not set a target date for emergence from Chapter 11 but said it plans to move quickly.
