In what may be a harbinger of things to come, the Archway & Mother’s Cookie Co. abruptly declared bankruptcy and announced it would cease operations, taking down several storied brands, including Archway Oatmeal Cookies, Circus Animal Cookies, and Salerno Butter Cookies.
The company is owned by Catterton Partners, a private-equity shop, which purchased it from the Italian food conglomerate Parmalat in 2005.
The company, based in Battle Creek, Mich., isn’t giving many details. It issued a statement that it has “not been immune to the challenging economic environment,” and has been “operating at a loss due largely to the significant increases in raw material costs and the record high fuel costs across the country.”
And a Catterton spokesperson told the San Francisco Chronicle that, “as you know, the credit environment is very difficult now.”
But suddenly displaced workers and others are wondering why the closure was so abrupt. There is a federal law requires a 60-day notification of any layoffs. But the company cited “unforeseeable business circumstances” as a reason for circumventing that law. “A business uses that language to seek exemption from the act’s 60-day notice requirement,” the Chronicle noted.
It sounds like Catterton was at least fairly certain that it could secure some kind of financing, but with credit markets seized up, there wasn’t any to be found. Still, it must have known at least a few weeks ago that it was in trouble.
The bankruptcy filing lists assets of $50 million and liabilities of $500 million, according to the Chicago Sun-Times.
Private-equity-owned businesses are particularly vulnerable to the credit squeeze because they are essentially built on borrowed money.
Catterton has a big presence in the food and beverage sector. It has stakes in restaurant chains including Outback Steakhouse and Chedders, and brands such as Breyers Yogurt, and Sweet Leaf Tea.
