Del Monte Foods, the canned food giant and a household name for nearly 140 years, has filed for Chapter 11 bankruptcy protection in the US. The company has secured a lender-backed restructuring support agreement and arranged financing to support the process. As part of the deal, Del Monte will receive $165 million in new funding in exchange for enhanced protections on hundreds of millions of dollars in existing debt. Scroll down for more details.
Del Monte Files For Bankruptcy
According to Moneycontrol, the iconic Del Monte Foods, which has been a staple in American households, has filed for bankruptcy and has voluntarily entered Chapter 11. On Wednesday, a judge approved the $165 million loan in a court hearing, giving the company funds for added protection in existing debt.
In Chapter 11 bankruptcy, businesses restructure their debts and operations while remaining operational. It provides a legal framework to negotiate with creditors and create a repayment plan over time, to emerge stronger and more financially stable. This is also called ‘reorganisation bankruptcy’.
In a statement, Del Monte said they are entering Chapter 11 bankruptcy for multiple reasons, including a costly buildup of excess inventory resulting from elevated demand during the COVID-19 pandemic. They said it resulted in significant debt that has become more expensive as a result of rising interest rates. The firm has asked for court protection in New Jersey, mentioning it has almost $1.245 billion in secured debt.
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All You Need To Know About This
Del Monte’s bankruptcy filing is yet another challenge the company has faced since the controversial debt restructuring that was put in place less than a year ago. For now, it has secured $912.5 million in new funding, which will help keep operations running smoothly during the peak canning season and support the company through the ongoing sale process.
According to court documents, Del Monte has stated liabilities valued between $1 billion and $10 billion. They feel that with “improved capital structure, enhanced financial position, and new ownership”, they will be able to recover again.
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What are your thoughts about Del Monte’s bankruptcy filing? Let us know in the comments.
Cover Image Courtesy: X/@bcbluecon
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