KING OF PRUSSIA, Pa. — The U.S. beef industry took another hit last week when AFA Foods, Inc. declared Chapter 11 bankruptcy, citing both a severe plunge in sales and demand, as well as ongoing media coverage over what critics have labeled “pink slime.”

The Pennsylvania-based company’s CEO said in a statement that sales had fallen drastically because of “an unfounded public outcry over the use of boneless lean beef trimmings,” or what the USDA has defined as lean fine textured beef (LFTB).

AFA filed for bankruptcy protection April 2 in the U.S. Bankruptcy Court in Wilmington, Del., listing $219 million in assets and $197 million in debt. In addition, Tobias S. Keller, AFA’s lawyer, said the company wouldn’t be able to repay $138.1 million owed some of its top creditors.

In a March 28 news conference in Des Moines, Iowa, USDA Secretary Tom Vilsack and Iowa Gov. Terry Branstad said the “misinformation” from the media about LFTB recently forced Dakota Dunes, S.D.-based Beef Products, Inc. (BPI) to suspend operations at its plants in Iowa, Kansas and Texas, laying off more than 650 workers.

Vilsack and Branstad also said even though LFTB has been around for several decades and is safe to eat, the recent deluge of negative publicity surrounding the beef filler has hurt both Iowa and U.S. agriculture.

AFA processes more than 500 million pounds of ground beef products each year, distributing to retailers, which includes Walmart Stores, Inc., Safeway, Inc. and BJ’s Wholesale Club, as well as restaurants Burger King, Jack in the Box and Wendy’s.

According to Bloomberg News, AFA Foods entered bankruptcy “in part because of reduced sales and increased costs” caused by the slowdown in the market for ground beef as well as the negative media coverage.

Keller told the court the company used the product only at the customers’ request, which included restaurants and large grocery stores.

Jim Lochner, Tyson Foods CEO, said the “hubbub” over LFTB has caused a steady drop in overall beef demand as consumers have negatively reacted to the sudden and negative media blitz over the beef product.