(Bloomberg) -- Tupperware Brands Corp., whose plastic containers became synonymous with food storage, filed for bankruptcy following a years-long struggle with sales declines and growing competition.
The 80-year-old company filed for Chapter 11 protection in Delaware, where it said it will seek court approval to facilitate a sale process of the business as it keeps operating. The filing, which Bloomberg News reported on Monday was imminent, follows protracted negotiations between the company and its lenders over how to manage more than $700 million of loans.
“Facing ever more urgent liquidity needs and continued operational stress, the company restarted marketing efforts for the third time after the July 4 weekend,” Chief Restructuring Officer Brian J. Fox said in court papers filed Tuesday.
To help persuade lenders to back a renewed push for rescue financing, Tupperware lifted restrictions on trading in the company’s debt. Three new investors, including Stonehill Institutional Partners and Alden Global Capital, bought out the majority of the company’s senior loans for as little as 3 cents on the dollar, Fox said. The $8 million loan later prompted lenders to sue each other in New York.
The new lenders loaned Tupperware $8 million, but the company only got $6 million in fresh cash because the debt came with a 25% discount in the lenders’ favor. The lenders also demanded that Tupperware’s inventory be used as collateral on the new debt, Fox said.
Tupperware had been warning since 2020 that its ability to stay in business was in doubt. The company’s fortunes briefly revived when Covid-19 lockdowns led to a surge in home cooking — and, hence, leftovers. The company’s shares also had a temporary run as a meme stock.
Those tailwinds faded, though. And while creditors gave the company some breathing room, revenue continued to fall. As of June of this year, it planned to close its sole US factory and lay off almost 150 employees.
In the bankruptcy filing, Tupperware listed assets of between $500 million and $1 billion and liabilities of $1 billion to $10 billion.
“This process is meant to provide us with essential flexibility as we pursue strategic alternatives to support our transformation into a digital-first, technology-led company better positioned to serve our stakeholders,” Tupperware President and Chief Executive Officer Laurie Ann Goldman said in a statement late Tuesday.
Tupperware founder Earl Tupper introduced its plastic products to the public in 1946, and subsequently patented their flexible airtight seal. The brand’s goods later flooded into American homes, largely by way of independent sales parties hosted in suburban homes, helping the company to dominate the market for decades.
But as the parties faded away and competition heated up, its iconic products faced weakening demand. The company failed to keep up with the changing pace of retail and consumers who were heading online for many of the commodity products Tupperware was selling. The Covid pandemic briefly juiced sales, but the increase in people eating at home and buying Tupperware products didn’t last long.
By 2022, the company still relied on direct sales by an army of 300,000 amateur vendors. But shoppers were increasingly buying similar — and often cheaper — products online. They were going directly to Amazon or Walmart, and those who wanted to avoid buying more plastic goods could find similar containers made from more environmentally-friendly packaging.
The following year, the company got caught up in the meme-stock frenzy. An eye-popping share price masked many of Tupperware’s underlying problems and persisted despite the company itself warning that it had substantial doubt as a going concern.
Tupperware last year replaced its CEO and announced its factory-shutting plans. But it wasn’t enough to stave off the cash drain. And in the end, it wasn’t enough to save the company.
The case is Tupperware Brands Corp., 24-12156 US Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Shelly Banjo.
(Updates with new lenders buying the company’s debt in the fourth paragraph.)
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