Del Monte Foods, a 140-year-old “company whose canned fruits and vegetables have long been grocery store staples, has filed for bankruptcy as it grapples with mounting debt, post-pandemic headwinds and shifts in consumer spending,” reports the Washington Post:
The company announced Tuesday that it had voluntarily initiated Chapter 11 proceedings and reached an agreement with its lenders to sell most or all of its assets.
The company owes more than $1.23 billion in long-term secured debt.
“After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods,” said Greg Longstreet, CEO of Del Monte Foods.
The California-based company, which employs about 2,780 people, said it has secured $912.5 million in debtor-in-possessionfinancing to continue operations during the Chapter 11 process. Among its products are Contadina packaged tomatoes and Joyba bubble teas.
Outlining its recent business challenges, the company said in court documents that it had ramped up production to meet high demand during the coronavirus pandemic, but got saddled with surplus inventory when consumer spending declined after the pandemic subsided, resulting in significant write-offs or sale at substantial losses.
In 2023, Del Monte scaled back production, it said, given softening demand, but lower volume led to higher per-unit costs. “Altogether, this perfect storm of reduced margins, excess inventory and decreased customer demand created an unprecedented liquidity crisis for the Company.” Del Monte Pacific Ltd., which acquired Del Monte Foods in 2014, had also taken out loans to finance that purchase, adding to its debt burden. A rise in interest rates caused its cash interest expense to nearly double — from $66 million in 2020 to $125 million in 2025 — putting enormous pressure on its cash flow.
