H-Food Holdings LLC, the parent company behind contract food manufacturer Hearthside Foods, has initiated Chapter 11 bankruptcy proceedings. This strategic move is designed to significantly reduce the company’s debt burden by over $1.9 billion and attract $200 million in new capital upon successful emergence from bankruptcy.
Company executives have expressed confidence in the plan, citing “widespread support” from key financial stakeholders. This includes majorities of first and second lien lenders, unsecured noteholders, and equity holders, indicating a unified approach to the financial restructuring.
To ensure seamless operations during this transition, Hearthside Foods has filed standard “first day motions” with the court. These motions are intended to maintain normal business activities, ensuring uninterrupted payment of employee wages and benefits, continued service to customers, and fulfillment of obligations to vendors.
Funding for ongoing operations throughout the Chapter 11 process will be secured through a requested $300 million in debtor-in-possession financing, pending court approval. This financial injection is crucial for maintaining stability and operational continuity.
Darlene Nicosia, Chief Executive Officer of Hearthside, conveyed optimism about the future. “Today’s announcement marks an incredibly important step forward for Hearthside, our valued customers, and our dedicated team as we continue to transform our business for the future,” she stated. “With a sustainable capital structure and a significant infusion of new capital to fund our long-term plan, we will be well-equipped to enhance our leadership in the food manufacturing industry as we drive continued innovation and growth.”
The company anticipates a swift and efficient Chapter 11 process, with the goal of emerging in the first quarter of 2025. This financial restructuring follows a period of challenges for hearthside foods, including prominent mention in a New York Times article from February 2023. The article raised allegations concerning the employment of underage migrant children at Hearthside plants, alongside other employers. While not directly cited as a cause for the bankruptcy, this event occurred within a “tumultuous period” for the company, as described in reports.
