'Pink Slime' Meat Co. AFA's Creditor Settlement Gets Nixed

Law360, Wilmington (October 11, 2012, 7:54 PM EDT) -- A Delaware bankruptcy judge on Thursday rejected a proposed settlement among AFA Foods Inc.'s creditors over proceeds from the meat processor's liquidation, finding that the deal circumvented the usual protections afforded creditors under a Chapter 11 plan.

AFA, which was driven into bankruptcy by consumer backlash over “pink slime” beef filler, reached a global settlement last month where second-lien lenders agreed to give lower-ranking creditors a small cut in the bankruptcy. After selling its five processing plants separately for around $70 million and paying off senior...
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