Bloomberg: Bankruptcy a possibility for Bumble Bee
Bumble Bee Foods is considering filing for bankruptcy to alleviate it of an increasingly dire financial situation.
The San Diego, California, U.S.A.-based firm, which claims it is the largest seller of packaged seafood in North America, exceeded the leverage ratio it is allowed under the terms of its senior debt, according to Bloomberg. That sent the firm into technical default on its principal operating loan, a USD 650 million (EUR 550 million) facility with Brookfield Principal Credit as the administrative agent. However, its lenders have agreed to a forbearance period, allowing the company to continue its efforts to restructure itself to regain its profitability, according to the Wall Street Journal.
Bumble Bee is evaluating whether to undergo a court-supervised restructuring under Chapter 11, among several other options, Bloomberg reported. Another option could involve a sale of the company, but that option is complicated by a term of the company’s agreement with the U.S. Department of Justice – made in 2016 after it pleaded guilty in a price-fixing conspiracy – that a USD 25 million (EUR 22.3 million) fine would balloon to USD 81.5 million (EUR 72.6 million) if the company is sold. Additionally, the company still faces civil lawsuits stemming from the price-fixing scheme, and a separate class-action lawsuit over its “Dolphin-Safe” labeling claims.
Meanwhile, the company, which is owned by investment firm Lion Capital, is facing a liquidity crunch, according to Bloomberg. The company reported declining revenue in the first quarter of 2019 and is actively shopping Clover Leaf Seafoods, its Canadian arm.
Adding to the company’s troubles, former CEO Chris Lischewski has been charged with price-fixing and Lischewski has taken a leave of absence from the company to fight the case.