6740e149a383839431f1f928 Hearthside

Contract Manufacturing Giant Hearthside Files for Voluntary Chapter 11

Nov. 22, 2024
Between the filing and agreements with stakeholders, it will eliminate $1.9 billion of debt and hopes to emerge early next year.

Hearthside Food Solutions, maybe still the country’s biggest contract manufacturer, today filed a prearranged Chapter 11 petition with the assent of its key stakeholders so it can undertake a major restructuring.

The reorganization will allow Hearthside – with 2023 sales we estimate at $4 billion – to eliminate more than $1.9 billion of its debt and secure $200 million of new equity capital at exit, which “will position Hearthside to best serve its customer base and position it for long-term growth,” a company announcement said.

That exit comes up quickly. “The company intends to move through this process quickly and emerge from Chapter 11 in the first quarter of 2025,” the statement said. The company’s Interbake Canada operations are not part of the Chapter 11 filing.

The filing actually was by H-Food Holdings LLC, its nominal holding company, filed in the U.S. Bankruptcy Court for the Southern District of Texas.

Hearthside previously negotiated a global restructuring support agreement with its key stakeholders that will right-size the balance sheet, infuse the business with significant equity capital and position the company for significant long-term growth. The prearranged Chapter 11 filing was needed to consummate the transactions contemplated under the agreement.

“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,” said Darlene Nicosia, a former Coca-Cola executive who’s been Hearthside’s CEO since mid-2022.

“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. We have taken decisive action across our company to put our past challenges behind us and are encouraged by the improvement we have already seen in our employee engagement, organizational culture, and ability to deliver best-in-class, quality products and services that our customers can depend on.”

She emphasized the company’s plans have support throughout its capital structure, including significant majorities of its first lien lenders, second lien lenders and unsecured noteholders, as well as its equity holders.

Hearthside closed a Nashville plant this summer and earlier in the year sold one in Jacksonville, Fla.

To fund operations without disruption during the Chapter 11 cases, Hearthside has filed a motion seeking approval of $300 million of debtor-in-possession financing, including $150 million of new money from existing lenders. Following court approval, the company anticipates this financing will provide ample liquidity to support its operations during the Chapter 11 process.

Hearthside is headquartered in Downers Grove, Ill., and has a “production network” – we’re not sure how many facilities are owned or leased – of 28 facilities and a workforce of approximately 12,100. It clandestinely makes products, especially baked goods, for some of the country’s leading brand owners. Always a private equity-owned company, it was acquired in 2018 by Charlesbank Capital Partners and Partners Group.

Hearthside Food Solutions was our 2019 Processor of the Year.

About the Author

Dave Fusaro | Editor in Chief

Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.

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