Hearthside Foods enters restructuring agreement

After filing for Chapter 11 bankruptcy, the contract producer hopes to be poised for growth.

Photo: Ekaterina Bolovtsova/Pexels

H-Food Holdings LLC (dba Hearthside Foods), a snack and bakery contract manufacturer, has announced that it has entered into a global Restructuring Support Agreement (RSA) with key stakeholders. The company reports the move is intended to right-size its balance sheet, infuse the operation with equity capital, and position it for long-term growth. To consummate the transactions contemplated under the RSA, the company has filed voluntary petitions for prearranged Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas.

According to representatives, the restructuring will allow Hearthside to eliminate more than $1.9 billion of its debt and secure $200 million of new equity capital at exit, a move intended to position Hearthside to best serve its customer base and position it for long-term growth.

“Today’s announcement marks an incredibly important step forward for Hearthside, our valued customers, and our dedicated team as we continue to transform our business for the future,” says Darlene Nicosia, CEO of Hearthside. “With a sustainable capital structure and a significant infusion of new capital to fund our long-term plan, we will be well-equipped to enhance our leadership in the food manufacturing industry as we drive continued innovation and growth. We have taken decisive action across our company to put our past challenges behind us, and are encouraged by the improvement we have already seen in our employee engagement, organizational culture, and ability to deliver best-in-class, quality products and services that our customers can depend on.”

Representatives state the company has entered the process with widespread support throughout its capital structure, including significant majorities of its first lien lenders, second lien lenders, and unsecured noteholders, as well as its equity holders. Hearthside has filed a number of customary “First Day Motions” with the court in the hopes of facilitating a smooth transition into Chapter 11 and operating without disruption during the process, including continuing to pay employee wages and benefits, maintaining customer programs, and honoring obligations to vendors.

To fund operations without disruption during the Chapter 11 cases, Hearthside has filed a motion seeking approval of $300 million of debtor-in-possession financing, including $150 million of new money from existing lenders. Following court approval, the company reportedly anticipates this financing will provide ample liquidity to support its operations during the Chapter 11 process. The company intends to move through this process quickly and emerge from Chapter 11 in the first quarter of 2025. The company’s Interbake Canada operations are not part of the Chapter 11 filing.

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