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AFA Foods files for bankruptcy over “pink slime” controversy

Meat processor will sell some or all of its assets following outcry over ammonia-treated beef

Beef-processer AFA Foods is filing for Chapter 11 bankruptcy, following recent media scrutiny of its “pink slime” meat filler.

Pink slime, which also goes by the less colorful name of “finely textured beef,” includes beef scraps and connective tissue that are separated during processing, and then added into ground beef. Since these cuts of meat may come from parts of the animal that are more susceptible to contamination by bacteria, they are treated with ammonium hydroxide.

The most recent spate of media coverage began last month, when ABC News reported that 70 percent of supermarket ground beef contains the filler, although processors do not have to disclose this fact on food labels.

Beef processors counter that the U.S. Department of Agriculture (USDA) has long considered pink slime to be safe, and that small amounts of ammonium hydroxide  are regularly used to process foods ranging from orange juice to cheese to ketchup.

Still, the public controversy has had economic consequences for the meat industry, as some fast food restaurants, supermarkets and school districts said that they would no longer buy the product. Beef Products Inc. (BPI), a leading processer of pink slime, announced last week that it was suspending operations at plants in Iowa, Kansas and Texas because of the outcry.

For its part, AFA will attempt to sell some or all of its assets in an effort to continue funding ongoing operations, according to a company press release. GE Capital and Bank of America have also agreed to provide $56 million in debtor-in-possession financing to the company.

“We believe an orderly sale through Chapter 11 will allow us to unlock this value and provide a smooth transition for our employees, customers and other business partners,” said AFA’s interim CEO Ronald Allen.

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