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Iowa bankruptcy judge dismisses suit that held up Pure Prairie Poultry repayments

By KAALTV
Updated: February 24, 2025 - 9:25 PM
Published: February 24, 2025 - 9:15 PM

MGN: Poultry farm, photo illustration

(ABC 6 News) – A penniless poultry producer was cleared to start repaying some of its creditors last week, after an Iowa bankruptcy judge dismissed four businesses’ attempt to jump the line.

Pure Prairie Poultry ran a chicken production plant in Charles City until late September 2024, when the business filed for bankruptcy and stopped feeding the animals. Employees were laid off, and most did not receive their final paychecks.

“Unsecured creditors stand to recover very little, if anything, in any scenario. The expense of bankruptcy would eat away at what already stands to be a measly recovery for all creditors involved.”
Thad Collins, bankruptcy judge

Pure Prairie Poultry owes between $100 million and $500 million to hundreds of creditors, according to court documents.

In November, Wisconsin business Tri-State Poultry LLC, broiler producer Ekelr, LLC, and member Lee Frie filed a federal claim for $2,635,561.28 from Pure Prairie Poultry, along with Minnesota carrier Larry Falk.

Until last week, repayment to most of the chicken producer’s 937 creditors had been put on hold while the bankruptcy court deliberated.

Iowa bankruptcy case dismissed

On Feb. 5, federal judge Thad Collins dismissed the four businesses’ attempt to claim more than $2,600,000 ahead of the rest of Pure Prairie Poultry’s pack of creditors.

Collins noted that Pure Prairie Poultry owes hundreds of millions to its creditors, but only listed $50-100 million in assets.

Because there is “no equity,” if Collins chose to proceed with a traditional bankruptcy case, the assets would likely be abandoned by the trustee.

“Unsecured creditors stand to recover very little, if anything, in any scenario,” Collins wrote. “The expense of bankruptcy would eat away at what already stands to be a measly recovery for all creditors involved.”

Minnesota bankruptcy proceedings to continue

Even before the bankruptcy case was dismissed, federal judge Collins gave creditor Community Bank permission to advance money to Lighthouse Management Group, the organization placed in charge of selling Pure Prairie’s assets, to fix a “current ammonia leak and related issues” at the Charles City poultry plant.

Lighthouse Management was also authorized to hire a contractor to repair the ammonia leak in late January.

A next hearing in the repayment case had not been scheduled Monday, Feb. 24.

However, the Iowa Department of Agriculture and Land Stewardship entered the Minnesota repayment proceedings after concluding that Pure Prairie Poultry cost Iowa taxpayers $2.3 million after abandoning their chickens to the state’s care.