In-House Lesson: AFA Foods Files for Bankruptcy After 'Pink Slime' Press

By Edward Tan, JD on April 10, 2012 | Last updated on March 21, 2019

Meat processing giant AFA Foods has filed for bankruptcy-court protection due to controversy stemming from "pink slime," a ground beef filler. The company says the pink slime bankruptcy was brought on by slumping sales.

Pink slime is ammonia-treated boneless lean beef trimmings that is often added to ground beef. It has been approved for use for years by the USDA, the Los Angeles Times reports.

However, any in-house counsel worth their salt knows that even if something is deemed okay by the government, that alone isn't reason enough to do nothing.

Stemming the tide of bankruptcy may seem outside your pay grade, but not doing anything could end up costing you a job.

In AFA's case, the company was already reported to be struggling financially before the pink slime drama hit the media. However, company representatives state that the recent negative news coverage and celebrity backlash didn't help matters.

A good in-house counsel, and in fact any beef insider, arguably could have seen this impending bankruptcy coming. Financial instability plus bad press will usually lead to these sorts of things.

But a job-conscious GC should be able to anticipate that government entities usually react fast when negative press goes critical mass.

Though there isn't any word yet regarding a pink slime ban by the USDA, it won't be surprising if one were to follow.

Job security is more important than ever these days. And a quick memo on the possibility of legislation changes can sometimes be enough to create a chain reaction of marketing and product changes aimed at cutting off a vulnerable link. In the case of pink slime, it'd be cutting the filler out and letting customers know it.

But for AFA, its announcement that it will be cutting out the stuff in its future products might have come too late. For now, this pink slime bankruptcy filing may be one of the first of many more to come for the beef industry.

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