Objection to Simply Essentials sale may reopen bidding for closed Charles City chicken processing plant

By Bob Steenson, bsteenson@charlescitypress.com

As anticipated, an objection has been filed against the proposed sale of the Simply Essentials plant in Charles City, by another company willing to pay a higher price.

Wincorp International filed the objection last week in the U.S. Bankruptcy Court for the Northern District of Iowa, saying that it would pay $10 million for the closed chicken processing company’s assets, beating a $9.5 million offer that had already been accepted by the bankruptcy court trustee in the case.

A hearing has been set for Friday, July 16, for the judge in the bankruptcy case to decide whether to allow the trustee to accept the lower offer, or — more likely, according to trustee Larry Eide of Mason City — allow Eide to hold an auction of the assets and receive higher bids.

Wincorp, in its motion filed last Thursday, states, “In the event Pure Prairie Farms Inc. (PPFI) satisfies the trustee that it has the ability and the financial wherewithal to consummate the sale transaction, … then Wincorp offers $10,000,000.00 for purchase of the assets.

“In the event PPFI is unable to satisfy the requirements, … or for any other reason is unwilling or unable to purchase the assets pursuant to the terms and conditions of the motion, then Wincorp offers $9,500,000.00 for purchase of the assets,” Wincorp’s motion states.

The assets include 3.1 acres at 901 N. Main St., where the Simply Essentials processing plant and offices are located, and 9.7 acres of property at 300 Lawler St., the location of a parking lot and live barn, plus all the processing equipment still installed in the plant, other equipment and intellectual property formerly owned by Simply Essentials.

Pure Prairie Farms Inc. is a Minnesota business created in June 2019 that includes former suppliers of chickens to Simply Essentials.

Eide had previously accepted in writing PPFI’s offer for $9.5 million, which at the time was the “highest and best offer” for the assets.

But after accepting the offer by the former suppliers group, he had received the bid from Wincorp, which is owned by Jamaica Broilers Group Ltd., and which does business in the United States as The Best Dressed Chicken Inc.

If, at the hearing Friday, the judge allows additional bids to be received, Eide will hold an auction on Monday, July 26, to receive bids from anyone interested in purchasing the Simply Essentials assets.

In its motion filed last week, Wincorp said it will determine prior to the July 16 hearing “the appropriate purchasing entity” it will use to provide the required $500,000 cash deposit and verifiable evidence that it has the remainder of the $10 million available to make the purchase.

Pitman Farms, the former owner of Simply Essentials and a creditor in the bankruptcy with a first mortgage on the parking lot and live barn, filed a response to Wincorp’s motion, stating it does not object to the trustee’s proposal to open the sale up to “the highest and best bid.”

Pitman Farms also filed another action in the federal bankruptcy court last week, saying it supports Eide’s intention to sell a dozen or so semi tractors and trailers separately, and that Pitman “may be interested in bidding for some or all” of them.

Eide had told the Press previously that it was important to him to sell the main Simply Essentials assets as a “turnkey” operation that could be reopened as an operating business, because of its benefit to the community, but more importantly because that would likely yield the most money which could then be used to repay the creditors in the bankruptcy.

If an auction is held for the property on July 26, the bidding will start at Pure Prairie Farm’s bid of $9.5 million and the next bid will need to be at least $200,000 higher, Eide outlined in his motion. Subsequent bids would each need to be at least $100,000 higher.

Bidders will need to put down an initial deposit of $500,000, which will be refunded to unsuccessful bidders. The winning buyer will need to pay the balance of the purchase price at the closing, which will take place 20 days after the bankruptcy court approves the sale.