Shareholders in Pilgrim’s Pride have launched a legal attack against the company, claiming the chicken producer misrepresented its financial position and deliberately hid its capital problems.
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Two law firms, Izard Nobel and Coughlin Stoia Geller Rudman & Robbins, have launched suits against the US poultry giant.
The lawsuits were filed in the US District Court for the Eastern District of Texas and claim that the company knew, but did not disclose, that its financial results were “continuing to deteriorate”.
The complaints charges that Pilgrim’s Pride and certain of its officers and directors misrepresented the company’s financial condition and concealed the impact of capital problems on the business.
“Due to defendants’ positive, but false, statements, Pilgrim’s Pride’s stock closed as high as US$26.85 per share in late May 2008,” the statement from Coughlin Stoia asserted.
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By GlobalData“With the news of Pilgrim’s Pride’s significant losses, its shares fell to $3.84 per share on September 25, 2008 from $10.26 per share on September 23, 2008, and from the company’s Class Period high of $26.85 per share in late May 2008,” the law firm said added.
Shares in Pilgrim’s Pride were trading at $1 at 11.30am (ET) today (31 October).
The company’s share price plummeted after a research report from CreditSights warned that there was a high possibility that the group would file for Chapter 11 bankruptcy protection in December.
Pilgrim’s Pride has seen losses due to higher costs for feed and fuel, debt obligations, low meat prices, and losses on grain hedges.
At the end of last month, the company warned that it anticipated a significant loss and that it may default on credit agreements as a result. It has since received two temporary waivers from lenders.
A Pilgrim’s Pride spokesman told just-food that the company is unable to comment on “pending or threatened litigation”. The group also declined to comment further on its financial position.
