Tupperware Brands and some of its subsidiaries filed for Chapter 11 bankruptcy protection on Tuesday, succumbing to declining demand for its once-popular colourful food storage containers and ballooning losses.
The company's struggles to stem the drop in sales resumed after a brief surge during the pandemic when people cooked more at home and turned to its airtight plastic containers to store leftovers.
The post-pandemic jump in costs of critical raw materials such as plastic resin, as well as labor and freight further dented the company's margins.
In August, Tupperware had raised substantial doubt about its ability to continue as a going concern for the fourth time since November 2022 and said it faced a liquidity crunch.
The company listed $500 million to $1 billion in estimated assets and $1 billion-$10 billion in estimated liabilities, according to bankruptcy filings in the U.S. Bankruptcy Court for the District of Delaware.
Tupperware has been planning to file for bankruptcy protection after breaching the terms of its debt and enlisting legal and financial advisers, Bloomberg reported on Monday.
The report said the bankruptcy preparations began following prolonged negotiations with lenders over the more than $700 million in debt. The company will also seek the bankruptcy court's approval to facilitate a sale process for the business to protect its iconic brand and further advance Tupperware's transformation into a digital-first, technology-led company.
There are no current changes to Tupperware's independent sales consultant agreements.
The company will file certain customary motions seeking court approval to support its operations during the process, including the continued payment of employee wages and benefits as well as compensating vendors and suppliers under normal terms for goods and services provided on or after the filing date.
"Over the last several years, the company's financial position has been severely impacted by the challenging macroeconomic environment. As a result, we explored numerous strategic options and determined this is the best path forward," said Tupperware president and Chief Executive Officer Laurie Ann Goldman.
"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," added Goldman.
Additional info courtesy of Reuters