Newsletter
Del Monte Foods has filed for Chapter 11 bankruptcy, less than a year after a debt overhaul that sparked lawsuits.
The deets: the company entered a lender-backed restructuring support agreement and plans to sell most or all of its assets through the bankruptcy court. A judge has approved $165 million in fresh financing to fund operations during the sale.
Del Monte is carrying $1.245 billion in secured debt, much of it stemming from its acquisition by Del Monte Pacific Ltd (DMPL), listed in Singapore.
The purchase was funded by debt loaded onto Del Monte’s balance sheet, leading cash interest expenses to almost double from $66 million in 2020 to $125 million in FY25.
What led to bankruptcy: a pandemic-driven inventory glut, rising rates, and last year’s drop-down transaction, where assets were shifted away from some lenders piled pressure on the business. In June, the parent company skipped a debt payment as part of a lawsuit settlement.
Zoom out: in the past few years, many food companies have filed for bankruptcy as they grapple with a mix of rising costs, heavy debt, and rapidly changing consumer habits.
The pandemic dealt a severe blow to restaurants and packaged food brands alike, creating inventory gluts for some and crushing in-person sales for others. Chains like Red Lobster, Boston Market, Friendly’s, Cici’s Pizza, and Rubio’s Coastal Grill have all sought bankruptcy protection, while packaged food companies such as Dean Foods and Del Monte Foods faced similar pressures.
