A ground beef processor owned partly by former basketball-legend-turned-entrepreneur Magic Johnson has filed for bankruptcy. The company is blaming a decrease in consumer and business demand for beef, which can be attributed to the recent negative press that has surfaced with regards to the “pink slime” food additive that is found in it, reports the Palm Beach Post.
AFA Foods Inc., based in King of Prussia, Pennsylvania, operates seven facilities nationwide and supplies beef to such major vendors, such as Safeway, Wal-Mart Stores, Burger King, Jack in the Box, Carl’s Jr., and Wendy’s, has been negligent in paying its debts and is unable to secure bank loans.
Johnson, along with his partners, have filed bankruptcy with the courts because the company “faced with an immediate and unanticipated liquidity crisis.” According to the company’s interim CEO Ron Allen, profits suddenly took a sharp dive due to “an unfounded public outcry over the use of boneless lean beef trimmings,” he told the Palm Beach Post.
Coupled with the bankruptcy filing comes the likelihood of a layoff of more than 850 employees, although a company spokesperson states that they plan on conducting a quick sale of its assets while keeping layoffs to a minimum.
Until recently, the lean, finely textured beef, known to critics as “pink slime,” was added to America’s fast food, school lunches, and 70 percent of all ground beef sold at grocery stores. The outcry of pink slime came to a boiling point on March 7th, when the concoction was exposed on an ABC-TV World News report.
Although the beef filler is legal here in the States, it is not legal as a food additive in Canada or the United Kingdom.
Pink slime is actually a processing technique used to separate small amounts of muscle still attached to fatty tissue trimmed off meat. The pink slime is heated in the separation process, then treated with a “puff” of ammonium hydroxide gas to kill bacteria like E.coli and Salmonella. The technique has been around for eons and has been applied to some cheeses, puddings, chocolates and even baked products. Don’t look for the word ammonia to be listed on the ingredients of a food product, though, because it is only a fleeting addition.
The U.S. Department of Agriculture sanctioned the additive as “safe” 20 years ago and in recent times as well.
Thus far, a total of three factories that made so-called “pink slime” beef filler have shut down since public outcry about the filler began.