Borden Files For Bankruptcy: What Does Chapter 11 Mean For The Dairy Producer?

Following the bankruptcy filing of milk producer Dean Foods, Borden, another dairy company, has also filed for Chapter 11 after 163 years in business. Borden announced the restructuring of the company on Sunday.

According to Borden, the company along with certain affiliates, has filed for bankruptcy protection to reduce its current debt load and reposition itself for long-term success. The company said it will continue normal operations under the Delaware bankruptcy court supervision.

“Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure,” Borden CEO Tony Sarsam said in a statement. "This reorganization will strengthen our position for future prosperity."

In its bankruptcy announcement, Borden cited many milestones for the company that occurred in 2019, such as reviving the Elsie brand and the introduction of new dairy products, which it said outpaced the industry in growth with increased year-over-year sales.

But despite the efforts made by Borden, the dairy company said the cost of raw milk has increased. The company also pointed to market challenges in the dairy industry that contributed to its debt load. The company listed its assets and liabilities between $100 million and $500 million on its Chapter 11 filing, Bloomberg reported.

"Despite our numerous achievements during the past 18 months, the Company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry," Sarsam said.

"These challenges have contributed to making our current level of debt unsustainable. For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the Company. Ultimately, we determined that the best way to protect the Company, for the benefit of all stakeholders, is to reorganize through this court-supervised process."

Borden employs about 3,330 workers and plans to work closely with its creditors during the restructuring while maintaining day-to-day operations. Borden was acquired by ACON Investments LLC in 2017.