On Thursday, Bumble Bee Foods, known for its seafood products, has filed for bankruptcy and announced to sell its assets to Taiwan based-FCF Co. for $925 Million. The decision comes after it couldn’t retrieve itself from legal challenges faced over the years.
The 120-years-old North American company has filed for Chapter 11 bankruptcy protection in Delaware to pave a way for its sale of assets. “It’s been a challenging time for our company but today’s actions allow us to move forward with minimal disruption to our day-to-day operations,” said Jan Tharp, president, and chief executive officer for Bumble Bee, in a statement.
The legal troubles
In 2017, Bumble Bee Foods pleaded guilty in a price-fixing scheme in which it conspired to fix and raise prices with rivals StarKist Co. and Chicken of the Sea Inc. from 2011 to 2013 in the United States. While the former CEO Christopher Lischewski pleaded not guilty related to the price-fixing scheme, his case is under trial in California federal court.
Earlier, the court ordered the company to pay $81.5 Million in fines; however, it urged that such huge fines can lead to insolvency. Later, it was reduced to $25 Million. Out of that fine, $17 Million remains outstanding.
In addition, Bumble Bee faces at least three lawsuits and eight legal claims from grocers, distributors, and others, LA Times reported. The massive defense costs led to $650 Million in debts at the time of bankruptcy.
Currently, the San-Diego based company has arranged an $80 million term loan from its current lenders and $200 Million credit-line to fund the company in bankruptcy.
FCF’s offer will serve as the leading bid for Bumble Bee in bankruptcy while the court supervises an auction process that is expected to close in 60 to 90 days, according to Bumble Bee.
“It is our clear intent that all U.S. and Canadian operations continue uninterrupted,” said Tharp in a statement. “Employees will get paid, our customer partners can count on us to continue delivering outstanding brands and services, and vendors will be paid in the ordinary course of business.”