Postville’s largest rental property company, owned by the same family as bankrupt Agriprocessors, has filed for bankruptcy protection.

Nevel Properties Corp. filed for bankruptcy protection Monday, claiming assets of less than $50,000 and liabilities of more than $1 million.

The filing represents more fallout from the May 2008 raid by federal immigration officials on Agriprocessors. The raid yielded the arrest and deportation of about one-third of the plant’s work force.

The plant was closed last fall as the company’s financial problems mounted. Production has since been restarted on a smaller scale under direction of a federal bankruptcy receiver, and an auction to sell the company is scheduled for March 23.

The bankruptcy filing came just as Nevel Properties was due for a state court hearing in Waukon for appointment of a receiver in a foreclosure petition against 19 of its properties by Citizens State Bank of Postville.

Nevel Properties filed for protection under Chapter 11 of the U.S. Bankruptcy Code, which provides for protection from creditors during a reorganization of the company’s finances to allow it to continue in business.

Citizens State Bank cast doubt on the prospects for a business reorganization in a motion filed almost immediately after Nevel Properties filed for bankruptcy protection. The bank, saying it was owed $302,173, asked the court for relief from the “automatic stay” on collection efforts against the bankruptcy filer in order to pursue its foreclosure action.

In the motion, the bank said it keeping the properties it seeks to foreclose on is not necessary to a reorganization “in that a successful reorganization is not prospect in this case.”

Most of the roughly 200 properties owned by Nevel Properties were rented to employees of Agriprocessors, the meat processing company and related firms, or to Shochtim & Mashgichim.

State corporation records list Sholom Rubashkin as president and treasurer of Nevel Properties, and Tzvi Rubashkin as secretary.

The bankruptcy of Nevel Properties is more bad news for the City of Postville, which is now struggling to pay the debt on a wastewater treatment facility built to handle the needs of Agriprocessors.

The City of Postville appears to be the largest unsecured creditor of Nevel Properties, which listed a $14,584 debt to the Postville Water Department, and another $4,100 debt listed “City of Postville utilities.”

(Source: The Gazette)