Extremely large grain of salt, meet Joseph Sarachek:
Iowa slaughterhouse seeks to sell embattled plant
IOWA CITY, Iowa -- The list of bidders for the Agriprocessors kosher slaughterhouse remains a secret, but on Wednesday a few more details spilled out about potential buyers of the plant now seeking bankruptcy protection.
Joseph Sarachek, the Chapter 11 Operating Trustee for the company, said all the dozen or so bidders are national or multinational companies that have experience in the food industry. They've all agreed to keep the business open -- instead of perhaps selling it off in pieces -- and all agreed to keep it in Postville, Iowa.
"The bottom line is, they certainly need to show financial wherewithal, that they intend to keep the business here in Postville," Sarachek said in a telephone interview.
That's good news for the small northeast Iowa town whose economy has come to rely in large part on the embattled kosher slaughterhouse, where 389 illegal immigrants were arrested in a federal raid in May.
"If it's true, it's actually good news for the city," said Postville City Clerk Administrator Darcy Radloff. "It means jobs for our economy here and hopefully it'll turn around our vacant homes we have here."
Since the raid, what was once the nation's largest kosher slaughterhouse filed for bankruptcy and temporarily shut down production before resuming at levels far below capacity.
The plant's former CEO, Sholom Rubashkin, remains in the Dubuque County Jail on charges of bank fraud, harboring illegal immigrants, document fraud and identity theft. Other employees have pleaded guilty to related immigration charges, and the plant is accused of repeated violations of state and federal child labor laws, wage requirements and safety rules.
In a November bankruptcy filing, the company said it owes $50 million to $100 million to 397 secured and unsecured creditors. Of that, it owes $33 million to its largest creditor, St. Louis-based First Bank.
By late December, Sarachek wrote in a progress report that "no fewer than 12 parties" expressed interest in acquiring all or part of the slaughterhouse's assets.
Sarachek said Wednesday the company expects the sale to be completed by April 1, in time to gear up for the busy Passover season which begins at sundown on April 8.
But Sarachek said not all the bidders have experience in the slaughterhouse industry, much less kosher slaughter.
"They certainly all have experience in the food industry," he said.
Rabbi Menachem Genack, the Orthodox Union's chief kosher executive in New York, said he wasn't concerned by the lack of slaughterhouse experience.
"That plant is uniquely set up for kosher production," Genack said, adding that he doesn't know who the prospective bidders are.
He said that whoever buys the plant need not have previous experience with kosher slaughtering because the plant is built in such a way that it complies with kosher guidelines. But regardless of the buyer, Genack said something needs to be done soon.
"(Agriprocessors) is critical to both the economy of the entire region and also critical to the supply of kosher meat and poultry," Genack said.
Sarachek said the company is breeding chickens and is getting closer to reopening its beef lines in anticipation of the Passover season.
I heard from a very well placed industry insider last night, someone who knows the kosher meat and food business better than most others, and who has been watching Agriprocessors closely for many years.
He said yesterday's Sarchek press release on potential buyers and the state of Agriprocessors was total BS. He said the press release was so bad, it was "self-destructive."
No qualified buyer could possibly be stupid enough or naive enough to buy Sarachek's BS – unless that potential buyer is a foreign company without enough experience in the US market to realize it is being had.
The foreign buyer Sarchek is trying to hoodwink is probably Soglowek.
Now, as for Sarachek painting himself the savior of Postville, the reason Sarachek says any potential buyer must intend to keep the business in Postville is simple – and it has nothing to do with Joseph Sarachek.
At the bankruptcy hearing the last week of December, the court was about to force Agriprocessors into Chapter 7 liquidation.
Because the US Attorney had moved for forfeiture of Agriprocessors' property and assets and the bank did not want to extend financing.
It was only some impassioned last minute lobbying during that hearing from a government official close to the case – not Sarachek, not Postville's mayor or city clerk, not any state or county officials, not Iowa's US Congressional delegation or their staffs, not the governor or any member of his administration or staff – who convinced the US Attorney to agree to potentially wave forfeiture for a qualified buyer who would keep the plant open and in Postville.
In other words, any buyer who wants to buy pieces of the company but not keep the Postville plant running may lose his purchase to forfeiture. And that means no such purchase will take place.
It is not Sarachek who is saving Postville – far from it. The people saving Postville are that unnamed government official and the US Attorney.
So, are there really a dozen or so qualified buyers?
Every source I've spoken to say there are two or three serious potential buyers, with Soglowek being the most serious among them.
To get to more than a dozen you have to count hackneyed Rubashkin schemes like the Quantum Partners bid (more here) and little old ladies who want to buy the plant with Green Stamps and cereal box tops – and even that probably would not put the number of potential buyers anywhere near a dozen.
Some people think lying is part of sales. Joseph Sarachek seems to be one of them.
But any good salesman will tell you lying is the worst thing a salesman can do. Once trust is broken, sales evaporate.
Sarachek's business model seems to be based on not getting caught before the sale. After all, he doesn't have to worry about return business. His real customers are the secured creditors – i.e., the banks – not the town, not the feedlots, not the suppliers and certainly not the workers. Once the deal is inked, Joe Sarachek is out of town like a carpetbagger in the night, never to return. All the others, except the banks, will be left empty handed.
And if a buyer is tricked into paying too much?
Every extra penny Sarachek takes from Agriprocessors' eventual buyer will mean one penny less that buyer can use to pay his workers a living wage. It means the buyer will have less money available to grow and sustain the business.
Sarachek's job is to get the most money possible for the sale. But that must be done honestly, without lying and without misleading buyers.
Mr. Sarachek, the City of Postville and Agriprocessors workers suffered greatly from the Rubashkin family's lies. There is no reason why they should have to suffer again due to yours.