In order to pay creditors the owed amount of as much as US$100 million, Zacky Farms LLC, a Fresno, California-based poultry producer, filed for bankruptcy with plans to sell itself.

The closely held company blamed the filing on heavy debt and soaring feed costs in papers filed in US Bankruptcy Court in Sacramento, California. Zacky listed as much as US$100 million in assets.

"Normal operations and customer service will continue without disruption," Zacky officials said in a statement Wednesday (Oct. 10). "The poultry industry has been under severe stress due to historically high corn and soymeal prices leading to significant operating losses in its turkey and chicken business," the company said.

Global food prices tracked by the United Nations will climb to a record by June as droughts in the US, South America and Russia push up animal-feed costs, spurring meat and dairy farmers to reduce herds, according to financial-services provider Rabobank International.

The worst US drought in 56 years sent the price of corn, the main ingredient in livestock feed, to a record US$8.49 a bushel on August 10 on the Chicago Board of Trade. The UN's gauge of 55 food items reached a six-month high in September.

Zacky spends about US$1.8 million a week on feed for about 1.9 million turkeys and 600,000 chickens, according to court documents. Starting in April, the company tried to avoid bankruptcy by borrowing US$7 million from the Robert D. Zacky and Lillian D. Zacky trust, which owns half of Zacky, court papers show. Family members related to Albert Zacky own the other half.

Zacky needs to borrow US$71 million at a 6% interest rate to operate in bankruptcy, according to court papers. The so-called debtor-in-possession loan is being made by the Lillian Zacky Family Trust, the company said in a statement. The loan, which must be approved by US Bankruptcy Judge Thomas Holman, requires "the commencement of an immediate process to sell the company as a going concern," Zacky said in court papers filed today.

The two biggest unsecured creditors listed in the Chapter 11 bankruptcy petition were Western Milling, of Goshen, California, owed US$6.6 million, and Foster Farms LLC, of Livingston, California, owed US$1.2 million.