Creditors file to force Simply Essentials into Chapter 7 bankruptcy

By Bob Steenson, bsteenson@charlescitypress.com

A group of creditors who say Simply Essentials LLC still owes them money has filed a petition to force involuntary Chapter 7 bankruptcy on the closed Charles City chicken processing plant.

The action was filed last Friday in U.S. Bankruptcy Court for the Northern District of Iowa in Cedar Rapids.

Attorney Joseph Peiffer of Ag & Business Legal Strategies of Cedar Rapids filed the petition on behalf of eight businesses or individuals who say that Simply Essentials owes them a total of $805,746.

Under Chapter 7 bankruptcy, a trustee is appointed to take over the assets of the debtor and sell them in such a way as to be able to pay as many of the debts owed to the creditors as possible.

While filing for bankruptcy is usually a decision made by a business or individual, it can be forced if at least three creditors join together in a petition to the bankruptcy court.

Peiffer did not return a phone call Wednesday afternoon to comment on the petition, but from the documents filed in bankruptcy court it appears that the creditors were people or companies that provided space to raise chickens for Simply Essentials to process.

The creditors are:

• Pop’s Poultry Farm LLC of Aplington, with Tom Poppens listed as initial member, claiming to be owed $138,796 for seven months rent at $19,828 per month.

• Tyler Bortle of Whitehall, Wisconsin, claiming to be owed $70,539 for seven months rent at $10,077 per month.

• Lee Frie of Fountain City, Wisconsin, claiming to be owed $53,858 for one month rent on one building for $8,778, and seven months rent for another building at $6,440 per month.

• Dennis Gilbertson of Spring Green, Wisconsin, claimed to be owed $97,496 for seven months rent at $13,928 per month.

• Clyde Gumbert of Mondovi, Wisconsin, claiming to be owed $86,330 for seven months rent at $19,514 per month, less mitigation.

• Dale Lahn of Mondovi, Wisconsin, claiming to be owed $208,194 for seven months rent at $29,742 per month.

• Curt Larson of Eleva, Wisconsin, claiming to be owed $81,135 for seven months rent at $17,457 per month, less mitigation.

• Mike Schlesser of Arcadia, Wisconsin, claiming to be owed $69,398 for seven months rent at $9,914 per month.

The place of business for Simply Essentials was listed in the petition as 901 N. Main St., Charles City, which is the location of the now-closed processing facility.

The mailing address for the business is listed as the address of Pitman Family Farms, the Sanger, California, company that purchased Simply Essentials in November 2017.

Simply Essentials had previously been majority-owned by a private equity firm, Tillridge Global Agribusiness Partners, which is an affiliate of NGP Energy Capital Management of Dallas.

Chicken processing plants at the Simply Essentials site have a history of failure and bankruptcy.

Custom Poultry Processing, which promised to sell organically raised, antibiotic-free chicken, lasted less than two months before closing in January 2011.

Three creditors filed a petition to force involuntary Chapter 7 bankruptcy, but Custom Poultry Processing was able to convert that to Chapter 11 bankruptcy, which allows a reorganization of debt in an effort to allow the business to keep operating.

Cedar River Poultry purchased the 43,700-square-foot facility in bankruptcy court in the summer of 2011 and was expected to open later that year, selling mostly whole “head-on, feet-on” chickens to Asian markets, but by 2013 the plant was still not operational, with owners saying they were awaiting U.S. Department of Agriculture permits to trade with Asia. That company also eventually filed for bankruptcy.

In 2016, a U.S. bankruptcy court opened the sale of the Cedar River Poultry facility, and it was purchased by Simply Essentials.

Simply Essentials invested millions of dollars in converting the facility to a state-of-the-art chicken processing facility, using air-chilling to produce what it said was better tasting, healthier chicken products.

The company announced last June that it would be closing, giving the 60-day notice required by state and federal employment law.

The plant closed its doors on Aug. 5, 2019, putting more than 500 people out of work.

Interest in the facility has apparently been picking up recently, however.

Tim Fox, executive director of the Charles City Area Development Corp., said at the most recent CCADC meeting in February that he was aware of at least one entity interested in purchasing the plant for an ag-related use, and had heard there might be others.