Minnesota court authorizes bank to take Pure Prairie Poultry assets in ‘credit bid’

By Bob Steenson, bsteenson@charlescitypress.com

Community Bank & Trust of West Georgia has taken ownership of most of the former Pure Prairie Poultry plant in Charles City, acquiring the company’s real estate, equipment and other major assets through a court-supervised receivership in Minnesota.

The bank, along with another investor, Michael Helgeson, took possession through a “credit bid” – using the debt owed to them in lieu of a cash purchase – under a May 30 order signed by Nicollet County District Court Judge Allison Krehbiel, according to court documents.

The action effectively ends months of one branch of the legal maneuvering over the closed poultry processing plant.

Community Bank & Trust had been Pure Prairie’s primary lender, holding a claim of roughly $36 million, part of which was guaranteed by the U.S. Department of Agriculture.

The loan guarantee was issued through the USDA’s Food Supply Chain Guaranteed Loan Program, created to expand domestic food processing capacity and strengthen the nation’s food supply chain following disruptions during the COVID-19 pandemic.

Helgeson, who is a former leader in another poultry company, held secured claims of about $2.1 million.

Under the credit bid, Community Bank agreed to take over the bulk of the company’s assets in exchange for applying approximately $25.7 million of its outstanding debt toward the purchase.

Helgeson acquired certain personal property for his portion, the court record shows.

The receivership proceedings followed Pure Prairie Poultry’s financial collapse late last year, but not before the company first attempted a Chapter 11 bankruptcy reorganization in federal court.

In September 2024, Pure Prairie filed for bankruptcy in Minnesota, seeking court approval for interim financing to keep the plant running while it looked for a buyer.

That plan quickly fell apart after Community Bank & Trust objected to the proposed financing deal.

Pure Prairie had arranged up to $15 million in “debtor in possession” financing from Sandton Capital, but the loan required existing creditors to voluntarily subordinate their liens – meaning the new lender would jump ahead of prior secured creditors like CB&T.

Community Bank refused to subordinate its claim without USDA approval, which had not been granted.

The bank also raised concerns about Pure Prairie’s ability to generate sufficient revenue to remain operating even with the additional financing.

Several other creditors also objected.

Without interim financing, the company moved to dismiss its bankruptcy case less than a week after filing, and closed its doors a few days later.

After the federal bankruptcy case was dismissed, Pure Prairie assigned its assets to Lighthouse Management Group under Minnesota’s “assignment for the benefit of creditors” law.

That state receivership process allows for liquidation or sale under court supervision, but with fewer restrictions than federal bankruptcy.

Nicollet County court documents show that Lighthouse and its advisers attempted to market the Charles City facility and related assets to outside buyers.

They initially secured an offer from 4G Poultry LLC to acquire the business for $6 million, but Community Bank again objected, calling the price too low.

The bank ultimately exercised its right to credit bid a higher amount based on its secured debt.

Helgeson, who held separate secured liens, also submitted a credit bid for equipment and personal property.

Judge Krehbiel’s order approved the transfer of assets “free and clear of all liens, claims, and encumbrances,” effectively wiping out any lower-priority creditor interests in the property that was transferred, the court records show.

That gives the new owners clean title to the land, buildings, machinery and other operating assets of the former poultry processor.

While the major asset sale is complete, Lighthouse Management Group continues to pursue collection of unpaid customer accounts receivable, which totaled about $2.1 million as of early June.

On June 9, Judge Krehbiel issued a separate order directing several remaining customers to turn over unpaid balances to the receivership, according to newly filed court documents.

Funds collected from these receivables will be distributed separately according to creditor priorities, including potential claims under federal Packers and Stockyards Act trust provisions for poultry growers who supplied birds to the plant.

Community Bank’s decision to acquire the plant through the credit bid may reflect its belief that it can ultimately recover more of its loan by controlling future resale or redevelopment of the property.

Had the plant been liquidated through bankruptcy, the bank risked recovering only a fraction of its secured claim in a forced auction.

Pure Prairie Poultry Timeline

• Dec. 2021 – Pure Prairie Poultry purchases and begins restoring the former Simply Essentials poultry plant in Charles City.
• Nov. 2022 – Initial production of whole chickens begins after extended facility upgrades.
• Nov. 2023 – Plant adds secondary processing, expanding product offerings.
• Sept. 20, 2024 – Pure Prairie files for Chapter 11 bankruptcy reorganization in federal court in Minnesota.
• Sept. 26, 2024 – Community Bank & Trust and other creditors object to Pure Prairie’s bankruptcy financing plan, blocking proposed $15 million debtor-in-possession financing.
• Sept. 27, 2024 – Pure Prairie files emergency motion to dismiss its bankruptcy case due to lack of operating funds.
• Oct. 21, 2024 – Pure Prairie enters receivership under Minnesota’s Assignment for the Benefit of Creditors law; Lighthouse Management Group is appointed as assignee.
• Fall 2024 – Spring 2025 – Lighthouse markets the company for sale. An initial $6 million offer from 4G Poultry LLC is submitted.
• May 15, 2025 – Community Bank & Trust objects to the 4G Poultry sale and announces intent to submit a credit bid.
• May 27-28, 2025 – Community Bank & Trust submits a credit bid of $25.7 million; Michael Helgeson submits a separate credit bid of $2.1 million for certain personal property.
• May 30, 2025 – Minnesota court approves sale of Pure Prairie assets to the secured creditors via credit bid.
• June 2025 – Receivership continues collection efforts on remaining unpaid customer accounts totaling approximately $2.1 million.