The Simply Essentials facility in Charles City was sold to The Best Dressed Chicken back in August, but due to objections made against its bid, it is no longer involved in the purchase of the facility.
The objection was signed by 17 different growers from Minnesota and Iowa.
Earlier this year on Aug. 11, a bid of $9.5 million was accepted at auction from The Best Dressed Chicken for the Simply Essentials chicken plant.
The Simply Essentials chicken plant may soon have its new owner.
However, The Best Dressed Chicken's bid was withdrawn, allowing Pure Prairie Farms Inc. to purchase Simply Essentials, according to documents filed with the United States Bankruptcy Court Northern District of Iowa on Sept. 24, 2021.
Simply Essentials was originally sold to Pure Prairie Inc. earlier this year, but after accepting a $9.5 million offer from Pure Prairie, a $10 million offer was received by Wincorp International, an affiliate of The Best Dressed Chicken. The new offer prompted Eide to seek approval for an auction of the Simply Essentials plant and all of its assets.
The auction over the Simply Essentials plant will be pushed back 30 days.
The bid from The Best Dressed Chicken was withdrawn after objections were filed by the initial petitioning creditors and Prairie's Best Farm Inc.
People are also reading…
The objection to the sale of Simply Essentials to The Best Dressed Chicken came about because of claims the company's bid was a "sharp bid," or a bid relative to the highest bid, and the contract offered to growers by The Best Dressed Chicken is "significantly less desirable."
The petitioning creditors who filed the objection claim that the conditional bid place by Wincorp International of $10 million that caused the bidding process to go to auction equated to a "sharp bid" and that bid discouraged Pure Prairie from participating in the sale further.
The bid ultimately accepted from The Best Dressed Chicken of $9.5 million was the same as the initial bid accepted by the trustee's from Pure Prairie Farms of $9.5 million.
The objection goes on to claim that the contract with growers from The Best Dressed Chicken is much worse than the one with Pure Prairie.
The objection notes that the contract from The Best Dressed Chicken is a three-year contract, but The Best Dressed Chicken reserves the right to terminate the contract due to "economic necessity" so long as a written notice is given 90 days in advance.
Economic necessity is defined in the contract as "included but not limited to, the threat of economic and/or financial harm to the Company. Impending bankruptcy and/or disease outbreaks."
The objection also highlights that the Pure Prairie contract pays growers regardless of of whether their barns are full or empty, while The Best Dressed Chicken only pays growers a per pound fee when the barns are used.
The creditors who filed the objection claim that it's "common for the integrators, like The Best Dressed Chicken, to leave barns empty to punish Growers or to keep its costs low."
The creditors included a graph displaying the cumulative difference in payouts to growers between the contracts offered by Pure Prairie Farms and The Best Dressed Chicken.
The creditors also say that contract from Pure Prairie offers $3,350,000 more in guaranteed payments per year to growers and that The Best Dressed Chicken's contract "provides virtually no Grower protections."
Zachary Dupont covers politics and business development for the Globe Gazette. You can reach him at 641-421-0533 or firstname.lastname@example.org. Follow Zachary on Twitter at @ZachNDupont