Bankrupt poultry processor Townsends Inc. has abandoned its efforts at restructuring under Chapter 11 and will go into a Chapter 7 liquidation under a plan approved Wednesday by a Delaware bankruptcy judge. In December 2010 the Georgetown, Del.-based poultry processor filed for bankruptcy and has since sold of most of its assets to Peco Foods and Omtron Ltd.

The company “believe[s] that a request for conversion is the appropriate action at this time,” Townsends said in an Aug. 26 motion. “Should the case not convert, the debtors believe that they may become unable to continue to pay administrative expenses as they come due.”

Attorneys for the company said in a court filing last week that it had received no objections to the conversion, which U.S. Bankruptcy Judge Christopher Sontchi approved Wednesday.

Under the Chapter 7 conversion, a trustee will be appointed to oversee liquidation of the company's remaining assets. More than 30 unsecured creditors claim the company owes them about $12.1 million, topped by a $1.7 million claim from International Paper Co., according to the bankruptcy filing.

Sources: Law 360, Urner Barry