News update:Jan 20, 2010

Pilgrim's Pride sued for idling poultry plant

The city of Clinton in the US has sued Pilgrim's Pride for US$28.5 mln in federal court. The poultry processor has been accused of potentially turning the city into a ghost town by idling its plant there.

The city filed a complaint against Pilgrim's Pride in federal bankruptcy court, accusing the company of trying to manipulate the price of chicken by idling some of its processing plants, reports the Associated Press.

"With its largest and sole remaining employer, Pilgrim's, now evacuated, the city faces a crisis of revenue, bond payments and economic devastation, and as a result of the Pilgrim's evacuation is threatened with becoming a modern day ghost town," the lawsuit filed by the city said. "This serious economic situation is, however, a direct consequence of Pilgrim's illegal purpose in shuttering the Clinton plant and operations."

Pilgrim's Pride announced in 2008 it was idling the Clinton plant as the company struggled with high feed costs and lower market demand. Facing heavy debt, in December the poultry company filed for protection from creditors under Chapter 11 of the federal bankruptcy code, while it reorganizes its debt.

The city challenged the reasons for the company's decision to seek bankruptcy protection.

"A review of its recent actions toward its growers and poultry communities reveals a far different factual history, and that more accurate history is summarised as a series of attempts to manipulate chicken prices and create illegal preferences, all at the expense of growers and communities that provided Pilgrims with their unwavering support," the complaint says.

The damages the city is seeking include $8 mln in lost wages for the plant's 450 workers and $7.4 mln for wastewater and water expansion bonds for facilities that Clinton officials say they wouldn't have constructed without the Pilgrim's plant.

Source: Associated Press

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