Tue 05/11/2021 11:28 AM
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Relevant Documents:
Voluntary Petition
First Day Declaration
DIP Financing Motion
First Day Hearing Notice


 

















Summary
Debtor owns and operates a large-scale farrow-to-finish pork production business with farms in North Carolina and Georgia
Seeks to liquidate and phase out its market hog production, which would take approximately six months, and pivot to a farrow-to-wean business model
Requests $53.4 million of DIP financing from prepetition secured lenders First National Bank of Omaha and LOL Finance, including $13.1 million of new money and rollups with respect to all outstanding prepetition debt owed to the prepetition lenders


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N. G. Purvis Farms, Inc., a Robbins, N.C.-based large-scale pork production business with farms in North Carolina and Georgia, filed for chapter 11 protection on Thursday, April 8, in the Bankruptcy Court for the Eastern District of North Carolina, pinning the bankruptcy filing primarily on unsustainably high feed costs. The company is seeking to transition from its current farrow-to-finish business model to a farrow-to-wean model through which it will grow weaner pigs for sale to Murphy-Brown LLC pursuant to a supply and purchase agreement. As part of these transition initiatives, the company is looking to liquidate assets associated with its finishing operations. For access to the relevant documents above as well as our First Day by Reorg team's coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities including the N. G. Purvis Farms chapter 11 filing Request a Trial here.

The company anticipates six months to complete the liquidation and transition process and is requesting approximately $53.4 million in DIP Financing from prepetition secured lenders First National Bank of Omaha, or FNBO, and LOL Finance, including a total of $13.1 million of new money - $5.5 million from FNBO and $7.6 million from LOL, with all of the new money financing requested on an interim basis. Upon entry of the final order, the DIP facility would include a rollup of all outstanding prepetition debt obligations owed to FNBO and LOL in the respective amounts of $26.1 million and $14.2 million.

The first day hearing is set for Wednesday, May 12, at 2:30 p.m. ET.

The company reports $34.3 million in assets and $53.1 million in liabilities, and its prepetition capital structure includes:

  • Secured debt:

    • First National Bank of Omaha: $26.1 million (excluding interest)

    • LOL Finance Co.: $14.1 million (excluding interest)



  • Unsecured debt:

    • Fidelity Bank PPP Loan: $1.7 million

    • Other nonpriority unsecured claims: $10.8 million

    • Equity: The debtor’s equity is held equally by David Purvis, Jerry Purvis, Sr., Larry Purvis, Marie McFayden and Melvin Purvis.




The obligations under the FNBO loan are secured by first priority security interests on all of the debtor’s personal property (exclusive of titled vehicles), and a junior lien on certain real property and improvements owned by the debtor.

The obligations under the LOL facility are secured by senior liens in all or substantially all of the real property and improvements owned by the debtor. The debtor is in default under the FNBO loan documents and operated under forbearance until March 17, at which point FNBO invoked interest at the default rate.

The debtor is represented by Butler & Butler and Hendren, Redwine & Malone as bankruptcy co-counsel and Robbins May & Rich as special counsel. Nutriquest is the debtor’s restructuring advisor, with Nutriquest’s Steve Weiss serving as chief restructuring officer. The case has been assigned to Judge Stephani W. Humrickhouse (case no. 21-01068).

Background

N. G. Purvis Farms, incorporated in 1965 as Chatham Feed & Livestock, Inc. before changing its name to N.G. Purvis in connection with certain mergers, owns and operates a large-scale farrow-to-finish pork production business with farms in North Carolina and Georgia. The company breeds and raises weaner pigs, feeder pigs and market hogs, which are then sold to pork processors. The debtor owns 12 farms located in Montgomery, Moore, Chatham, Richmond and Warren Counties in North Carolina and two farms in Oglethorpe County, Ga., together with associated facilities. N. G. also leases and operates two farms in North Carolina’s Randolph and Richmond Counties. The debtor has 132 full-time employees and 17 part-time employees.

The debtor says its efforts to renegotiate the terms of its hog pricing agreement with key customer Smithfield Foods have not been successful, “primarily due to the regional cost disadvantage of the Debtor.” This dynamic has resulted in the “failure or significant downsizing and restructuring” of other large hog production companies located in North Carolina, the debtor adds.

The debtor’s largest unsecured creditors are listed below:











































































10 Largest Unsecured Creditors
Creditor Location Claim Type Amount
Fidelity Bank Fuquay-Varina, N.C. PPP Loan $    1,653,000
Sunrise Cooperative, Inc. Fremont, Ohio Feeding/Service
Agreement
1,647,598
Mercer Landmark Inc. Celina, Ohio Contract Finish
Facility Agreement
1,320,097
The Redwood Group, LLC Mission, Kan. N/A 674,013
PIC USA, Inc. Hendersonville, Tenn. Genetics Contract 650,409
Murphy Brown LLC Smithfield, Va. Feed Purchase
Agreement
627,193
Huneycutt Pig Farm Albemarle, N.C. N/A 507,279
Cargill, Incorporated Gainesville, Ga. N/A 431,656
WMI Animal Health
Veterinary Supply
Chicago N/A 240,378
2 F Farms Salisbury, N.C. N/A 198,066

The case representatives are as follows:



 













































































Representatives
Role Name Firm Location
Debtor's Co-Counsel Jason L. Hendren Hendren,
Redwine Malone
Raleigh, N.C.
Rebecca F. Redwine
Benjamin E.F.B. Waller
Debtor's Co-Counsel Algernon L. Butler, III Butler &
Butler
Wilmington, N.C.
Debtor's Regulatory,
Agricultural,
Employment and
General Corporate
Counsel
Stephen F. Later Robbins
May & Rich
Pinehurst, N.C.
Debtor's Restructuring
Advisor
Steve Weiss (CRO) NutriQuest
Business Solutions
Mason City, Iowa
Debtor's Accountants David Haskins Frost Raleigh, N.C.
Counsel to First
National Bank of
Omaha
Terri L. Gardner Nelson
Mullins Riley
& Scarborough
Raleigh, N.C.
Leslie Lane Mize
Co-Counsel to
LOL Finance
Monica Clark Dorsey &
Whitney
Minneapolis
Will Martin
Co-Counsel to
LOL Finance
Pamela W. McAfee Ellis &
Winters
Raleigh, N.C.
Charles N. Anderson, Jr.



DIP Financing Motion

The debtor requests approximately $53.4 million in DIP financing from prepetition secured lenders First National Bank of Omaha and LOL Finance, including a total of $13.1 million of new money ($5.5 million from FNBO and $7.6 million from LOL). The DIP facility would include a rollup of all outstanding prepetition debt obligations owed to FNBO and LOL in the respective approximate amounts of $26.1 million and $14.2 million, on a final basis. The DIP loan would be guaranteed by equityholders David Purvis, Jerry Purvis, Larry Purvis and Melvin Purvis.

The FNBO DIP consists of (i) pursuant to the interim order, a $2.5 million revolving credit facility that would be used to finance (a) the debtor’s wean-to-finish operations, (b) general and administrative expenses of the business and (c) bankruptcy expenses; (ii) pursuant to the interim order, a $3 million discretionary revolving credit facility that would be used to support the debtor’s hedging activities related to hog finishing operations; and (iii) pursuant to the final order, a rollup of $26.1 million of prepetition obligations owed to FNBO.

The LOL DIP consists of (i) pursuant to the interim order, a $7.6 million revolving credit facility that would be used to finance (a) an assignment from FNBO to LOL of its security interest in certain collateral related to farrow-to-wean operations, (b) the debtor’s wean-to-finish operations, (c) certain general and administrative expenses of the business (d) bankruptcy expenses; and (ii) pursuant to the final order, a rollup of $14.2 million of prepetition obligations owed to LOL.

The FNBO DIP financing facility bears interest at a fixed rate of 12%, plus 3% for the default interest rate. The LOL DIP facility bears interest at “a variable rate (currently 3.65%)” for the new money loans and 4.13% for the rollup loans, plus 2% for the default interest rate. All DIP loans mature on the earliest of Jan. 1, 2022, the effective date of any plan of reorganization/liquidation or other customary events.

To secure the DIP financing, the debtors propose to grant the DIP lenders first priority, priming liens on all of the debtor’s assets, excluding avoidance actions, subject only to permitted priority liens.

The company proposes replacement liens and superpriority administrative claims as adequate protection for FNBO and LOL, which have agreed to the use of cash collateral. In addition, pursuant to the final order, the debtors propose a waiver of the estates’ right to seek to surcharge its collateral pursuant to Bankruptcy Code section 506(c).

The budget is HERE.

The DIP financing is subject to the following milestones:

  • Interim DIP order: Entered by May 17 (seven business days after the petition date)

  • Final DIP order: Entered by June 7 (30 days after the petition date)

  • Deadline for sale/delivery of last pig owned by the debtor: Oct. 31

  • Plan confirmation deadline: Dec. 31


Other Motions

The debtor also filed various standard first day motions, including the following:



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