Canning giant company goes bankrupt

US-based canned fruit company Del Monte Foods has filed for bankruptcy less than a year after undertaking a controversial debt restructuring.

According to the news on Ntv; The company announced in a statement that it has signed a restructuring support agreement with its creditors and has initiated voluntary Chapter 11 proceedings to implement its terms. The company has received $912.5 million in debtor-in-possession financing commitments, including $165 million in new financing from some existing lenders.

A filing with the United States Bankruptcy Court for the District of New Jersey states that the company has both liabilities and assets estimated at between $1 billion and $10 billion.

The development ends a difficult year for the debtor, whose parent company, Del Monte Pacific Ltd, chose not to make a payment to the unit's creditors in June as part of a lawsuit settlement tied to a controversial debt restructuring.

Del Monte Foods said in a statement that the restructuring support agreement envisages the company initiating a sale process for all or a significant portion of its assets. The financing, combined with cash generated from continuing operations, is expected to provide sufficient liquidity during the sale process and fund ongoing operations as it aims to continue serving customers, the statement said.

Del Monte Foods underwent a debt revision last year that led to a lawsuit from remaining creditors who said the company defaulted on a $725 million financing deal when it moved assets out of reach of lenders.

The strategy, known in the industry as a “drop-down” transaction, allowed Del Monte Foods to raise fresh liquidity by borrowing against the transferred assets. The deal also gave priority to participating lenders through debt swaps and created different payment priorities, Bloomberg reported.

Source: Ntv