Create a free account to continue

Iowa Wants Agriprocessors Bankruptcy Case

Bankruptcy case for a kosher meatpacking company accused of labor violations at its Iowa plant should be heard in that state, Iowa's labor commissioner said.

DES MOINES, Iowa (AP) -- The Chapter 11 bankruptcy case for a kosher meatpacking company accused of immigration and child-labor violations at its Iowa plant should be heard in that state, not New York, Iowa's labor commissioner said Monday.

Labor Commissioner David Neil said in an affidavit filed in U.S. Bankruptcy Court for the Eastern District of New York that Agriprocessors Inc. potentially owes Iowa more than $10 million in civil penalties and back wages to workers at its plant in Postville.

"The State of Iowa has an overriding interest in vindicating violations of its labor and employment laws, and has a right to be heard in a convenient forum," Neil said.

Agriprocessors hasn't answered two notices of civil penalties filed against the company, and Neil said that if it doesn't answer them by the end of the month they become final.

Those civil penalties include allegations of more than 99,000 illegal deductions taken from employees' paychecks from January 2006 to June 2008 for a total of about $10 million. The company also owes hundreds of thousands of dollars in past-due wages and penalties, and the bill could climb because of thousands of alleged child-labor violations, Neil said.

One of Agriprocessors' creditors, First Bank Business Capital Inc., also has asked for the case to be moved from New York to Iowa. Court documents say the slaughterhouse owes St. Louis-based First Bank at least $33 million.

Government attorneys said in a memorandum supporting the bank's motion that while Agriprocessors' distributorship, some managers and its sole shareholder are in New York, its principal place of business is in Postville.

Kevin Nash, one of the New York-based attorneys for Agriprocessors, said the focus is on trying to get the bankruptcy case moving forward and working with the bankruptcy court trustee.

"I think the case is properly situated ... and should remain here," he said.

Production at the Agriprocessors plant in Postville, once the largest producer of kosher meat in the nation, has come to a halt.

The plant was raided by federal immigration agents in May, and 389 workers were arrested. Last week, a federal grand jury returned a 12-count indictment against the slaughterhouse that alleges managers were intricately involved in efforts to employ illegal immigrants.

The company had also operated a plant near Gordon, Neb. It has closed because of the company's financial problems.

More in Supply Chain