DALLAS (B)--A meatpacking company that supplied millions of pounds of beef to the nation's school lunch programs and fought against tougher U.S. Department of Agriculture food safety regulations has filed for bankruptcy. Supreme Beef Processors and Packers filed Sept. 26 for Chapter 11 reorganization in U.S. Bankruptcy Court.

The company said it would lay off 300 workers and shut down plants in Dallas and Ladonia, TX, on Sept. 22.

The move is the latest in what has become a test case over federal salmonella inspection standards adopted in 1995. The science-based system for inspecting meat and poultry replaced "poke-and-sniff" methods used for decades.

Supreme Beef chief executive Steve Spiritas said the company could not continue to operate under a "campaign of harassment, intimidation and misinformation" by United States Department of Agriculture.

The agency last fall pulled inspectors from the Dallas plant, effectively shutting it down, after the plant failed to meet the new safety standards. A federal judge, however, tossed out the new food safety rules, saying it was not a fair measure of a plant's sanitation.

USDA has appealed to the U.S. 5th Circuit Court of Appeals in New Orleans.

Earlier this year, USDA ordered a recall of two million pounds of beef sent by Supreme Beef to 16 states for distribution to schools. The agency also asked the meatpacker to voluntarily halt ground beef production and take corrective action.

"This company was very successful for 30 years until the USDA sought without notice to have a court battle," Spiritas said. "That's when things spiraled down at an enormous cost to us."

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