Tupperware’s lenders opposed the food storage and kitchen products company’s proposed bankruptcy auction during the company’s first court appearance, cutting off its access to cash and threatening to derail the company’s bankruptcy plans.
The Orlando, Florida-based company filed for bankruptcy protection late Tuesday, with $818-million in debt and a plan to find a buyer within 30 days.
But three key lenders, Alden Global Capital, Stonehill Institutional Partners and a trading desk of Bank of America, which bought Tupperware debt with a face value of $450-million in July, quickly opposed the company’s plans.
They took the rare steps of cutting off its access to $7.4-million in its bank accounts and filing a motion to dismiss the bankruptcy or convert it to a Chapter 7 liquidation that would allow lenders to quickly seize the company without the time and expense of a lengthy Chapter 11 bankruptcy.
The lenders’ attorney, Allan Brilliant of Dechert, said at a court hearing in Wilmington, Delaware, that the company’s bankruptcy strategy would simply drag out the company’s failed search for a buyer.
Tupperware has spent $67-million since January 2023 on restructuring and marketing professionals, but the highest bid was just 20 per cent of the company’s existing $818-million in debt, according to the lenders’ court filings. “They hope to convince Your Honor that they could sell to some third party rather than the lenders, but the reality is that that’s just not going to happen here,” Brilliant told U.S. Bankruptcy Judge Brendan Shannon, who is overseeing the case.
Tupperware resisted the lenders’ attempt to quickly foreclose on its assets after that purchase, instead believing that it should be allowed to conduct an open and transparent sale of its assets in a court-supervised bankruptcy proceeding, according to the company’s attorney, Spencer Winters of Kirkland & Ellis.
Winters pointed out that the objecting lenders had only recently acquired a controlling stake in the company’s debt for between $15-million and $30-million. That investment is far less than the bids that the lenders now portray as unrealistically low.
Brilliant said that the amount his clients paid for the debt was irrelevant.
Tupperware intends to ask Shannon to restore its access to cash accounts at a court hearing next week.
Tupperware attributed its bankruptcy to a years-long slump in sales, saying it relied too heavily on independent sales representatives instead of selling online or in retail stores.