After seven months of operation, Future Beef Operations (FBO) could spend the next six months in Chapter 11 bankruptcy protection.

The privately held, Parker, CO-based firm announced March 7 that it had initiated the request in response to a filing earlier that week by “several” unsecured creditors. At press time, the Cattle Buyers Weekly (CBW) newsletter identifies those creditors in its March 11 edition as the Stoltz Marketing Group of Boise, ID; Peak Office Furniture of Denver, CO; and High Plains Systems of Amarillo, TX.

The filing by the three firms says FBO owes them $18,243, CBW reports. The newsletter adds that “FBO also owes tens of millions of dollars to other unsecured creditors. It also owes its secured lender, the Bank of Nova Scotia, more than $160 million.”

FBO is a vertically-coordinated beef supply chain widely lauded for its gene-to-retail supply chain concept. In a hastily called March 7 teleconference with agricultural press, Ronnie Green, FBO vice president of cattle operations, said business operations had not been interrupted by the week's financial maneuvering.

Green said the confluence of a couple of factors have hindered FBO's goal of realizing a technology-laden, data-driven, inter-sector system designed to produce and develop beef products with maximum efficiency, quality and profit. These include higher startup costs than anticipated due to ongoing equipment problems and an unexpectedly tough fed cattle market in the latter half of 2001.

Green said operations continue uninterrupted in FBO's Arkansas City, KS, products center that opened in August 2001. The plant produces blue-chromed hides, case-ready ground beef, cooked deli products and pet treats, as well as a full line of boxed beef. FBO's major retail partner is Safeway, for which it provides case-ready beef products to the retailer's exacting specifications. The contract is under review, he said.

“The filing will allow us probably a six-month period of time to undergo a reorganization process, both in terms of our financing and debt structure as well as restructuring of the business itself to be better positioned in the marketplace,” Green said.

He added that FBO's Arkansas City plant “is now essentially operating at full speed. We are slaughtering at full capacity for what the plant was designed to do. The data systems are largely now in place and being finalized in the auditing process. The value-added units in pet treats, hides, cooked products, case-ready ground beef products and variety meat products are all operational and functional and are being continued into the reorganization period.”

He said the plant harvested 1,200-1,400 head/day during the week of March 4.

“We'll be at 1,700 head next week. We don't anticipate a slowdown at all. We have the inventory built, and we're prepared to go full run,” he said.

The recently revamped management team includes Thad York, acting CEO, and six vice presidents. These include Randal Garrett, Green, John Francis, Rob Streight, John Pougnet and Darrell Wilkes.