Snack maker Hearthside files for bankruptcy after child labor probe

Chewy

22/11/2024 19:52

By Dietrich Knauth
       NEW YORK, Nov 22 (Reuters) - Hearthside Food Solutions
filed for bankruptcy protection on Friday, seeking to trim $1.9
billion debt and restructure its operations after investigations
into child labor at factories where it made granola bars,
breakfast cereal and snacks.
    Hearthside said that it never knowingly employed underage
labor in its facilities, and that it had cut ties with
third-party staffing agencies and strengthened its employment
practices after a February 2023 New York Times article reported
that migrant children worked in unsafe conditions at
Hearthside's factories to make Chewy granola bars and pack bags
of Lucky Charms and Cheetos. 
    Hearthside denied allegations that its workplaces were
unsafe, but said that the article led to “immediate and severe”
consequences, including government investigations and scrutiny
by the media and Hearthside’s customers.
    Hearthside said that the investigations had not resulted in
any fine, and that they were not the primary reason for the
bankruptcy filing.
    Hearthside, which is owned by private equity firms
Charlesbank Capital Partners and Partners Group, filed for
bankruptcy in Houston, Texas bankruptcy court, seeking to
complete a restructuring that will eliminate $1.9 billion in
debt and secure $200 million in new equity investment. 
    The company’s lenders have agreed to support the
restructuring  and provide an additional $150 million bankruptcy
loan, according to Hearthside.  
    “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,” Hearthside CEO Darlene Nicosia said in a
statement. 
    Hearthside will continue operations as normal during its
Chapter 11 case, and it 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.
    Based in Downers Grove, Illinois, Hearthside employs over
12,000 workers at 28 facilities that supply baked foods, snacks,
nutrition bars and food packaging services to customers in the
food and snack industry.

 (Reporting by Dietrich Knauth; editing by Diane Craft)
 ((Dietrich.Knauth@thomsonreuters.com;))