Source: Tom Johnston, MEATINGPLACE, 1/10/19


James Foods on Monday filed for Chapter 11 bankruptcy protection to restructure debt amid negotiations over ownership of the facility in which it operates.

The Graham, N.C.-based maker of chicken potpies for retail and wholesale distribution has about 150 creditors, the top 20 of which have nearly $9 million in unsecured claims, according to court documents. James has assets of between $100,001 and $500,000.

Company officials said they racked up debt through a factoring agreement and various lenders while trying to ramp-up production, an effort launched based on estimates that their $4 million business could nearly triple. They also noted cash flow issues caused them to fall behind in payments to the IRS.

James Foods began as a company in 2004. In 2012, the company moved into a 40,000-square-foot USDA-inspected facility that it leases and spent $3 million on up-fit. Third parties currently are negotiating to buy the facility from the landlord for almost $1.4 million and lease it back to the processor.

“The company has reached the point where it is showing positive cash flow, however due to the outstanding debt and the landlord’s attempt to regain possession of the premises, it was determined that a Chapter 11 filing was the best method for restructuring its debt and finding a purchaser for the building so [James Foods] may remain in business,” company attorneys wrote in their filings.

The court has scheduled a hearing for Friday on a motion from James to pay its 27 employees as scheduled on that day. 

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