A federal judge has appointed a temporary receiver for a kosher meatpacking company in Iowa after a bank said that the company had defaulted on a $35 million loan and that it had written $1.4 million in bad checks.
The loan foreclosure against the company, Agriprocessors Inc., was the latest in a cascade of troubles that have come after nearly 400 illegal immigrant workers were arrested in a raid in May at its plant in Postville, Iowa. On Thursday, Sholom Rubashkin, the former chief executive, was arrested in Iowa on federal charges of conspiring to harbor illegal immigrants.
In a lawsuit filed Thursday in federal court in Cedar Rapids, First Bank Business Capital of St. Louis claimed that Agriprocessors had failed to maintain enough cash in designated bank accounts to stay current on the revolving loan it took out in 1999. The lawsuit was first reported Friday on the Web site of The Forward, a Jewish newspaper.
The suit also claims that Agriprocessors violated the loan terms by diverting nearly $1.4 million from First Bank accounts to another bank to issue payroll checks on Oct. 24. First Bank learned that those checks were returned for insufficient funds, the lawsuit says.
The suit says Agriprocessors had begun to fall behind on the revolving loan during the quarter that ended March 31, suggesting that its financial woes predated the raid, which decimated its workforce.