Nearly a year after Cooks Venture shuttered without warning, a group of contract farmers is suing four of the company's former executives.
Why it matters: The defunct Decatur company left hundreds of employees, dozens of contract farmers and other investors floundering last November, when it abruptly closed most of its operations.
- An estimated 1.3 million heirloom chickens being raised on contract farms were euthanized because support from the company essentially ceased and there was no operating plant to process them for meat.
Between the lines: Cooks declared bankruptcy in April and sold its remaining assets for $7.1 million to Pitman Family Farms of California in May, leaving individual farmers with fewer options for legal recourse.
State of play: The complaint , filed in the U.S. District Court for the Western District of Arkansas in Fayetteville, seeks unspecified compensation and punitive damages for 13 former contract chicken farmers.
- Named in the suit are: Cooks' co-founder and first CEO Matthew Wadiak; John Niemann, its second CEO; Blake Evans, a co-founder and executive vice president; and Tim Singleton, chief operations officer.
The suit claims the executives used a "predatory business strategy" that turned the company into a " de facto Ponzi scheme."
- "It required Cooks Venture to burn capital at a breakneck pace to secure and operate an ever-expanding array of chicken breeding, growing and processing facilities…" the complaint reads. The company's sales didn't replace the capital spent, so more capital was sought.
- Production leaped from 50,000 chickens per week when the company was founded in 2019 to about 700,000 per week in early 2022, the document claims.
Context: Cooks Venture launched at a time when many U.S. consumers were looking for options to buy slow-growing , free-range, raised-without-antibiotics chicken — for taste and quality. Some consumers believe this type of farming is better for the planet, though there are trade-offs .
- Axios examined SEC and Pitchbook data this past spring and estimated the company raised $150 million during its existence.
- Wadiak left the company in August 2023 and has stressed to Axios in the past he had no insight into the last few months of its operations. He's declined to say why he left.
What they're saying: "As you are aware, I had no involvement in the handling of this matter, as I was neither an officer, employee or shareholder during the shutdown," Wadiak said in a recent email to Axios about the lawsuit.
- "I deeply empathize with any farmers or individuals affected by the resulting losses, as I did myself. Supporting American agriculture and transforming our food system — moving away from one controlled by a few monopolistic corporations — has been my lifelong mission."
What we're watching: The legal process has just begun and it will likely take a long while for any resolution.
- Court documents show Wadiak was served a summons on Oct. 2.
Read previous coverage on Cooks Venture:
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