Popular snack maker confirms plans for favorite items like Cheetos as it files for bankruptcy over $1.9 billion debt
After accruing $1.9 billion in debt, a manufacturer of well-known snack items filed for Chapter 11 bankruptcy.
Despitelegalandfinancialtrouble, Hearthside Food Solutions plans to continue manufacturing snack favorites as usual.
Popular snack products are manufactured under contract by Hearthside Food Solutions, an American company.
For companies including Kraft, Kellogg’s, Mondelez, General Mills, and PepsiCo, the company manufactures bars, baked goods, meal kits, and packaged foods.
Hearthside Food Solutions’ parent business, H-Food Holdings LLC, declared Chapter 11 bankruptcy on November 22.
The corporation intends to restructure its business, obtain $200 million in new funding, and pay off $1.9 billion in debt through the petition.
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In a statement, Hearthside CEO Darlene Nicosia said, “We have taken decisive action throughout our company to put our past challenges behind us and are encouraged by the improvement we have already seen.”
In order to facilitate a seamless transition into restructuring and ensure smooth operations throughout the Chapter 11 process, the company submitted a number of standard first-day motions to the court.
Hearthside Food Solutions
Based in Downers Grove, Illinois, Hearthside Food Solutions is an American company that produces well-known snack items.
It was established in 2009 and has about 12,000 employees spread across more than 25 locations.
For consumers in the food and snack sector, the company manufactures packaged foods, baked goods, snacks, and nutrition bars.
Hearthside Food Solutions has produced snacks for well-known companies, including PepsiCo, Kraft, Kellogg’s, General Mills, and Mondelez.
According to the business, Hearthside Food Solutions plans to carry on as usual by paying employee salaries and benefits, upholding client programs, and fulfilling its commitments to vendors.
It submitted a motion to approve $300 million in debtor-in-possession financing to finance these businesses during the bankruptcy process.
“As we continue to transform our business for the future, today’s announcement represents a tremendously significant step forward for Hearthside, our valued customers, and our committed team,” Nicosia added.
As we promote ongoing innovation and expansion, we will be well-positioned to strengthen our position as leaders in the food manufacturing sector with a sustainable financial structure and a sizable influx of fresh funding to support our long-term strategy.
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SNACK STRUGGLES
The declaration of bankruptcy by Hearthside Food Solution comes after a turbulent time for the business.
The business came under fire last year after it was alleged that its snack factories used underage labor.
A New York Times article from February 2023 reported that migrant children worked in unsafe conditions at Hearthside Food Solution’s facilities to produce snacks including Chewy granola bars and pack bags of Lucky Charms and Cheetos.
The company said it never knowingly employed underage labor at its factories and denied allegations that its work environment was unsafe.
It shared it had cut ties with third-party staffing agencies and strengthened its employment practices following the report.
Hearthside Food Solutions also shared that the New York Times article resulted in immediate and severe consequences such as government investigations and backlash from the media and customers.
The company said the investigations did not result in any fine and were not the main reason for the bankruptcy filing.
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