Canned fruit company Del Monte Foods filed for bankruptcy, less than a year after executing a controversial debt restructuring.
(Bloomberg) — Canned fruit company Del Monte Foods filed for bankruptcy, less than a year after executing a controversial debt restructuring.
Del Monte Foods said in its statement that the restructuring support agreement contemplates the company undertaking a going-concern sale process for all or substantially all of its assets. Financing along with cash from ongoing operations is expected to provide sufficient liquidity during the sale process and fund ongoing operations, as it intends to keep serving customers, according to the statement.
Del Monte Foods executed a debt overhaul last year, which became the subject of a lawsuit by left-behind lenders who said the company defaulted on a $725 million financing agreement when it shifted the assets away from the reach of lenders.
The strategy — known in industry parlance as a drop-down transaction — allowed Del Monte Foods to raise fresh liquidity by borrowing against the transferred assets. The deal also prioritized participating lenders via debt swaps and created different payment priorities, Bloomberg reported.
News Courtesy: livemint.