AFA Foods blames ‘pink slime’ controversy for bankruptcy filing

For a controversy cooked up over a product that’s been around for years, the recent outcry over “pink slime” seems to be hitting many businesses where it hurts, most recently causing beef products company AFA Foods Inc. to declare Chapter 11 bankruptcy.

The Pennsylvania company is blaming the recent coverage of ammonia-treated boneless lean beef trimmings – variously mocked as “pink slime” or “Soylent Pink” – for its dire financial straits.

The business, which is owned by billionaire Ron Burkle’s Yucaipa Cos., said it will shut down operations at its California factory while continuing to produce ground beef elsewhere.

Though the USDA has long considered the fat-free meat filler to be safe to consume, the product suddenly sparked an outburst of outrage, with critics such as celebrity chef Jamie Oliver attacking it as unappetizing and unhealthy.

Schools rushed to take it off their cafeteria menus; major supermarket chains pulled it from their shelves. Even fast food companies such as McDonald’s and Burger King disavowed the meat.

The backlash has caused trouble at companies besides AFA. Beef Products Inc. shut down production at three of its four plants. Tyson Foods Inc., the largest protein producer in the country, said demand for all ground beef products will likely slump.

AFA’s troubles began before the “unfounded public outcry,” but the company said it had worked out a debt extension plan that would have helped it survive through the winter. But the pink-slime furor “dramatically reduced the demand for all ground-beef products” before AFA could take advantage of spring barbecue season, according to the filing.

RELATED:

On ‘pink slime’: Where’s the perspective?

‘Pink slime’: Kroger joins others in dropping beef product

Columbus salami factory fined $700,000 for ammonia leak

‘Pink slime’ in school burgers? Food advocates have heard worse

‘Pink slime’s’ Beef Products Inc.: Hard knock for a good company?

Pink slime controversy will cause slump in lean beef demand: Tyson

Follow Tiffany Hsu on Twitter and Google+