By Dietrich Knauth
NEW YORK (Reuters) – Hearthside Food Solutions filed for bankruptcy protection on Friday, seeking to cut $1.9 billion in debt and restructure its operations after investigations into child labor at factories where it made granola bars, breakfast cereals and snacks.
Hearthside said it never knowingly employed underage labor at its facilities, and that it had cut ties with third-party employment agencies and strengthened its labor practices after a February 2023 strike. New York Times (NYSE:) article reported that immigrant children were working in unsafe conditions in Hearthside factories to make Chewy (NYSE:) granola bars and packaging bags of Lucky Charms and Cheetos.
Hearthside denied allegations that its workplaces were unsafe, but said the article had “immediate and serious” consequences, including government investigations and scrutiny by the media and Hearthside customers.
Hearthside said the investigations had not resulted in any fines and were not the primary reason for filing for bankruptcy.
Hearthside, which is owned by private equity firms Charlesbank Equity Partners (WA:) and Partners Group, filed for bankruptcy in bankruptcy court in Houston, Texas, with the goal of completing a restructuring that will eliminate $1.9 billion in debt and secure $200 million in new capital investments.
The company's lenders agreed to support the restructuring and provide an additional $150 million bankruptcy loan, according to Hearthside.
“We have taken decisive steps across our company to put 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 operations as normal during its Chapter 11 case and intends to emerge from bankruptcy by the first quarter of 2025. The company's Interbake Canada operations are not part of the Chapter 11 filing.
Headquartered in Downers Grove, Illinois, Hearthside employs more than 12,000 workers across 28 facilities that provide baked goods, snacks, nutrition bars and food packaging services to customers in the food and snack industry.
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