By Dietrich Knauth
NEW YORK (Reuters) – Hearthside Food Solutions filed for bankruptcy protection on Friday, seeking to reduce its $1.9 billion debt and restructure its operations after investigating child labor at factories where it made granola bars, breakfast cereals and snacks.
Hearthside said it never knowingly employed underage workers in its facilities, and that it cut ties with third-party employment agencies and strengthened its labor practices after a February 2023 New York Times article reported that migrant children were being kept in unsafe conditions worked in the factories of Hearthside to make Chewy granola bars and pack bags of Lucky Charms and Cheetos.
Hearthside denied allegations that the workplaces were unsafe, but said the article led to “immediate and serious” consequences, including government investigations and scrutiny by the media and Hearthside’s customers.
Hearthside said the investigation had not resulted in a fine and that this was not the primary reason for the bankruptcy filing.
Hearthside, owned by private equity firms Charlesbank Capital Partners and Partners Group, has filed for bankruptcy in the bankruptcy court of Houston, Texas, in an effort to complete a restructuring that will eliminate $1.9 billion in debt and secure $200 million in new equity investments.
According to Hearthside, the company’s lenders have agreed to support the restructuring and provide an additional $150 million bankruptcy loan.
“We have taken decisive action across our company to move past our past challenges behind us, and are encouraged by the improvement we have already seen,” Hearthside CEO Darlene Nicosia said in a statement.
Hearthside will continue to operate normally during the Chapter 11 case and plans to emerge from bankruptcy in the first quarter of 2025. The company’s Interbake Canada operations are not part of the Chapter 11 filing.
Based in Downers Grove, Illinois, Hearthside employs more than 12,000 employees in 28 facilities that provide baked goods, snacks, nutrition bars and food packaging services to customers in the food and snack industry.
(Reporting by Dietrich Knauth; Editing by Diane Craft)
