On Friday, May 15, 2015, Golden County Foods, Inc. (“GCF”), a business that manufactures prepared foods, filed a voluntary chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. It was joined by two affiliates, GCF Franchisee, Inc. (“GCFF”)and GCF Holdings II, Inc. (“Holdings”). The cases are docketed as case no. 15-11062 and have been assigned to The Honorable Kevin Gross.
As described in the Declaration of James J. Bradford filed in support of the petitions, Holdings is a privately held, non-operating holding entity with no other assets than its holdings in GCF. Holdings has guaranteed all of GCF’s secured indebtedness. GCFF is a co-borrower on GCF’s indebtedness. Though GCFF was once an operating entity, it now has no operations, no employees and no assets.
As reasons for the filing, Mr. Bradford’s declaration notes that it faced severe liquidity issues as a result of certain unrealized business opportunities. In addition, the debtor also experienced certain production inefficiencies when it was unable to secure all the packaging needed for its products. Finally, the Debtor ran into issues with one of its major customers that exacerbated the Debtors’ liquidity crisis.
According to Mr. Bradford’s declaration, beginning in December 2014, the Debtor undertook to market itself for sale. As a result of those efforts, the Debtors have identified Monogram Foods, a Memphis-based food manufacture who wishes to acquire the Debtors’ assets and integrate the Debtors’ business into its own. Monogram has been identified as a stalking horse purchaser for substantially all the Debtors’ assets at a price of $22 million.
In the bankuptcy case, the Debtors will seek to sell their assets to Monogram pursuant to a 363 sale, and subject to higher and better bids. Mr. Bradford hopes to complete that process within 60 days. According to Mr. Bradford, Monogram has conditioned closing of any sale on rejection of the Debtor’s collective bargaining agreement with the United Foods and Commerical Workers, Local 1473. Approximately 62% of the Debtors’ workforce is unionized.