CALIFORNIA – Del Monte Foods announced July 1, that it has filed for voluntary Chapter 11 bankruptcy.
The company, headquartered in Walnut Creek, California is working to sell all or most of its assets for the best value as a part of a financial restructuring.
It will continue operating during the sale to maximize returns for all stakeholders.
“This is a strategic step forward for Del Monte Foods. After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods,” said Del Monte Foods president and CEO Greg Longstreet.
He adds that with better finances and new owners, the company will be in a stronger position to succeed long-term.
Consumer preferences have shifted away from canned food
The 139-year old company specializing in canned fruits and vegetables filed for bankruptcy due to financial challenges including high debt levels, rising operational costs and changing consumer preferences.
“Consumer preferences have shifted away from preservative-laden canned food in favor of healthier alternatives,” said Debtwire global head of legal and restructuring Sarah Foss.
To support the Del Monte’s transactions and fund its ongoing operations, it has secured $912.5 million in debtor-possession financing, including $165 million in new funds, from existing lenders, pending court approval.
This financing, plus cash from operations, will fund the sale process and support the company’s current pack season.
“While we have faced challenges intensified by a dynamic macroeconomic environment, Del Monte Foods has nourished families for nearly 140 years, and we remain committed to our mission of expanding access to nutritious, great-tasting food for all,” said Longstreet.
