Instant Brands files for Chapter 11

September 2023 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

September 2023 Issue

Despite its products being found in millions of homes across the globe, international houseware and appliance manufacturer Instant Brands has filed for Chapter 11 bankruptcy protection.

The company, which is controlled by private equity firm Cornell Capital, cited rising interest rates for its financial difficulties and Chapter 11 filing in the Southern District of Texas, as it attempts to restructure liabilities of as much as $1bn.

Furthermore, despite high market penetration and the company’s recent achievements, which includes staying in business during the coronavirus (COVID-19) pandemic and the global supply chain crisis, its debt-laden financial situation has become untenable.

The court filing stated that the manufacturer has liabilities and assets ranging from $500m to $1bn and 1000 to 5000 creditors. Moreover, the company owes its top five creditors more than $38m in total. The company also revealed it had $512.3m in outstanding principal funded debt obligations.

Instant Brands’ entities located outside of the US and Canada are not included in the Chapter 11 bankruptcy filing.

The bankruptcy court has authorised Instant Brands on an interim basis to access and use financing from its existing lenders provided under a $125m debtor-in-possession (DIP) asset-based revolving credit facility, and a $132.5m DIP term loan credit facility, up to $100m of which will be immediately funded on an interim basis.

The interim approvals granted by the court will enable the company to continue: (i) paying employee wages and benefits without interruption; (ii) paying vendors, suppliers and distributors in full under normal terms for goods and services provided on or after the filing date; and (iii) providing housewares and appliance products under its iconic brands.

Throughout the Chapter 11 process, the company plans to stay in business – operating in Asia, the UK, Europe, the Middle East, Australia and New Zealand – and continue to serve retailers “without interruption” and to pay its employees, while seeking to shore up its finances and prevent the sale of some of the best-known brands in kitchenware.

“We are continuing to manage additional macro-challenges beyond our control that have impacted our business and affected our liquidity levels,” said Ben Gadbois, president and chief executive of Instant Brands. “As a result, our capital structure – including our debt levels – is now unsustainable. In light of these issues, we have been engaged with our sponsor, lenders and other financial stakeholders to determine a path forward that best positions Instant Brands for its next phase of success.”

Serving as Instant Brands’ legal counsel is Davis Polk & Wardwell LLP. Guggenheim Securities, LLC is serving as investment banker, with AlixPartners serving as restructuring adviser.

With a stated mission to provide innovative products that deliver amazing culinary experiences for all consumers, Instant Brands designs, manufactures and markets a global portfolio of innovative and iconic consumer lifestyle brands including Instant Pot, Pyrex, CorningWare and other popular kitchenware and houseware brands. The company is headquartered in Illinois and employs more than 2000 people across four continents.

“We want to thank our lenders and all advisers for working with us and supporting us with new financing,” concluded Mr Gadbois. “While we continue our efforts to strengthen our financial position, this court-approved financing gives us the ability to continue to provide all of our great products to consumers around the world during this process.”

Fraser Tennant