Affiliated Foods seeks Chapter 7 liquidation.(FOOD)(Brief article)

Affiliated Foods Southwest Inc. of Little Rock, which had filed for Chapter 11 bankruptcy reorganization in May, now has asked a U.S. bankruptcy judge to convert the case into a Chapter 7 liquidation.

It also announced that its remaining employees have been terminated. It is unclear how many employees Affiliated had in July, but in May there were 100.

Affiliated Foods said in a court filing last week that it couldn't get additional liability and workers compensation insurance coverage beyond July 17.

"Accordingly, the Debtors are ceasing operations on July 17, 2009 and terminating all employees," the filing said. "The Debtors assert that it is not in the best interest of the estates, the creditors, its former employees and the public to continue operations without sufficient insurance coverage."

Affiliated Foods asked that the conversion to Chapter 7 be made without notice or a hearing.

The company said its entire inventory has been sold.

Affiliated was once one of the largest wholesale food cooperatives in the southwest United States. It is owned by its members, and any profits were annually returned to its members through patronage.

Officials at Affiliated Foods could not be reached for comment nor could its bankruptcy attorney, Jan Hayden of Heller Draper Hayden Patrick & Horn LLC of New Orleans.

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