**Del Monte Foods Files for Bankruptcy Amid Debt Restructuring Challenges**
Del Monte Foods, a prominent canned fruit manufacturer, has filed for bankruptcy less than a year after a contentious debt restructuring process. The company has entered into a restructuring support agreement with its lenders and initiated voluntary Chapter 11 proceedings to execute the terms of this agreement. As part of this process, Del Monte Foods has secured $912.5 million in debtor-in-possession financing, which includes $165 million in new funding from select existing lenders.
According to a filing with the United States Bankruptcy Court for the District of New Jersey, Del Monte Foods’ liabilities and assets are estimated to be between $1 billion and $10 billion. This filing marks a difficult year for the company, which saw its parent organization, Del Monte Pacific Ltd., opt to skip a payment to the unit’s lenders in June as part of a settlement related to the controversial debt restructuring.
In its statement, Del Monte Foods indicated that the restructuring support agreement includes plans for a going-concern sale process for all or nearly all of its assets. The financing, along with cash generated from ongoing operations, is expected to provide adequate liquidity during the sale process and support continued operations, as the company aims to maintain service to its customers.
Last year, Del Monte Foods undertook a significant debt overhaul, which led to a lawsuit from lenders who claimed the company defaulted on a $725 million financing agreement by transferring assets beyond the reach of lenders. This strategy, referred to as a drop-down transaction, enabled Del Monte Foods to secure new liquidity by borrowing against the assets that were moved. The deal also prioritized certain lenders through debt swaps and established varying payment hierarchies.
As Del Monte Foods navigates this challenging period, the outcome of its restructuring efforts and asset sale will be closely watched by industry stakeholders.
**FAQ**
**What led to Del Monte Foods filing for bankruptcy?**
Del Monte Foods filed for bankruptcy due to challenges stemming from a controversial debt restructuring and subsequent financial difficulties, including a significant lawsuit from lenders.
