Deli meat producer Freirich Foods claims “temperature abuse” of nearly 1.2 million pounds of corned beef housed at a third-party cold storage facility was the sole reason the 103-year-old company was forced to file for bankruptcy protection.
CEO Paul Bardinas said the company tapped its credit line in January for $7 million as it ramped up production of corned beef, which makes up a large portion of the company’s annual sales, ahead of St. Patrick’s Day.
“Throughout the year, we typically operate just on our cash reserves, and we’re able to function week to week because we’re a solvent company — and we were — until this happened,” Bardinas told FreightWaves. “We were actually looking forward to a profitable first quarter and a good St. Patrick’s Day, but we did have to borrow money to build this inventory and to store it.”
Family-owned Freirich Foods, headquartered in Salisbury, North Carolina, has been operating since 1921. Bardinas said he’s the fourth generation involved in the company’s day-to-day operations.
While Bardinas declined to name the cold storage facility, Freirich Foods’ Chapter 11 bankruptcy petition, filed March 20 in the U.S. District Bankruptcy Court for the Middle District of North Carolina, lists claims against Americold Logistics and insurers, arising from “spoliation of product due to lack of refrigeration.”
“At the moment all we have is the spoiled product, obviously, because temperature abuse is the only thing that explains it,” Bardinas said. “And the only place we see it might have happened was at the cold storage facility. Whatever happened to the product had to be fairly substantial. Either it was in the cooler at the wrong temperature for a significant amount of time, or there was a fairly dramatic event where it warmed up.”
As of publication, Americold Logistics had not responded to FreightWaves’ request seeking comment or to confirm the corned beef had been stored at one of its facilities.
According to its website, Freirich Foods sells its corned beef product to BJ’s Wholesale Club, Eagle Giant and Price Chopper, among other large grocery chains along the Eastern Seaboard.
“Everything seemed to go off without a hitch until we started receiving complaints from customers in early March who had received product from this facility about off conditions, including spoilage issues and discolored product,” Bardinas said.
He said the complaints sounded alarms for the deli meat producer, which also produces pastrami, roast beef and other products.
The company launched an investigation at its facility in North Carolina, which Bardinas said included the U.S. Department of Agriculture and the North Carolina Department of Agriculture.
“We conducted a fairly exhaustive investigation here at the facility to see if there was anything that could explain such a widespread issue with the raw material, with ingredients, with anything that may have happened,” Bardinas said.
Prior to customer complaints, Bardinas said the company had produced corned beef at its facility that shipped to the third-party cold storage facility as well as product that it shipped from its facility directly to customers. He claims that none of the product that shipped directly from its facility to food service companies or to retail customers had any product complaints.
“The only product that seemed affected was the product that went through the storage facility or that was housed at the cold storage facility,” Bardinas said. “We reached out to them when we first started to get complaints, trying to get some supporting documentation for the conditions in which our product has been stored temperature-wise and any data logging record they might have. They were unable to produce those.”
Freirich Foods was forced to withdraw all of its product, which amounted to about 1.2 million pounds of corned beef, because the company was facing a fairly large problem and needed data from the cold storage facility to know what happened, Bardinas said.
“The company stopped responding to us,” he claims.
In its petition, Freirich Foods lists both its assets and liabilities as between $10 million and $50 million. The company states that funds will be available for distribution to unsecured creditors.
“Fortunately, I think the bankruptcy court understands our situation and has granted all our motions so our employees will continue to be paid,” Bardinas said. “We did our best to protect most of our vendors and suppliers by paying them up to date before we filed, so we’ve done everything we can to maintain those relationships because it was totally this event that’s caused us to file and we hope that whether it’s insurance or litigation, we can recover this loss and then continue as we were for the last 100 years, a solvent and profitable company.”
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