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Bankruptcy, Insurance Claim Stall $86M Plant

ALBERT LEA, MN-The new 380,000-sf pork processing plant would replace one that burned down here a year ago. However, bondholders are calling in subordinated debt as an insurance claim is taking longer than expected to settle.

By Jim McCartney | Updated on June 04, 2002

ALBERT LEA, MN-Farmland Industries, the large farm cooperative based in Kansas City, MO, had planned to build a new $86-million, 380,000-sf pork processing plant here. But that was assuming it would work out its disputes with insurance companies, and before it filed for reorganization under bankruptcy laws this week..

The farm cooperative is still negotiating with insurance companies over whether the plant should be declared a total loss or partially repaired. Meanwhile, the company receivedan unsolicited offer from Smithfield Foods to buy Farmland’s meat operations.

“Our next step on the Albert Lea project remains getting our insurance claims resolved,” says Sherlyn Manson, a spokesman for Farmland. “We continue to ask the insurance companies to work toward an immediate settlement.”

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