P&C Poultry Distributors Inc. and its affiliate Custom Processors Inc. have filed for Chapter 11 bankruptcy due to declining sales.

According to court papers, sales of $55.8 million in 2008 declined to $47.2 million in 2009, and fell even further in early 2010 when Yum! Brands Inc., the company's largest customer, revised its menu to focus on grilled, rather than fried, chicken. Sales went up later in 2010, but chicken prices rose due to a heat wave. P&C's largest supplier, Lawrence Wholesale, also sued to recover $12 million, and a settlement agreement did not make it out of negotiations due to secured lender Eat West Bank's non-approval.

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According to court documents, P&C owes the bank $5.5 million on a revolving credit and $3.3 million on a term loan. Liens have been placed on all assets.