Tupperware files for Chapter 11 bankruptcy

December 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2024 Issue

Iconic food container company Tupperware Brands Corporation, which over the last 70 years became synonymous with food storage products, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

The company and several of its subsidiaries filed for bankruptcy amid dwindling product demand and mounting financial losses.

According to a statement announcing the filing, Tupperware intends to continue operations and conduct a 30-day bidding process to find a buyer for the entire company.

Tupperware has $500m to $1bn in estimated assets and $1bn to $10bn in estimated liabilities, according to bankruptcy filings. It listed the number of creditors to be between 50,001 and 100,000.

Tupperware exploded in popularity in the post-war era through its strategy of direct sales to customers, but has struggled in recent years. In April 2023, it disclosed in a regulatory filing that it could go out of business if it was unable to secure additional funding to allow it to continue to operate.

In August 2023, Tupperware announced it had reached to an agreement with its creditors to reduce its interest payment obligations by $150m. It also secured $21m in new financing, an extension on the deadline for paying back about $348m in debt and a reduction in the amount of debt it owed by around $55m.

But these measures were insufficient in the long term and its finances continued to struggle. Earlier this year, the company was forced to close its only US manufacturing plant, resulting in 148 job losses.

The company has $812m in debt, much of which was purchased by distressed debt investors at a deep discount in July, according to court filings. Those new lenders had sought to use their debt position to seize Tupperware assets, including intellectual property such as its brand, pushing the company to seek bankruptcy protection, Tupperware said.

The emergence of e-commerce retailers such as Amazon also had a significant impact on Tupperware’s finances, allowing consumers to explore cheaper alternatives to Tupperware, which maintained a premium pricing strategy. Though the company did move to put its products in some stores – most notably, Target in the US – it was unable to arrest decline.

Tupperware’s financial difficulties have also been exacerbated by ongoing macroeconomic challenges, including a post-coronavirus (COVID-19) pandemic jump in the costs of labour, freight and raw materials, such as plastic resin.

A notable shift in consumer trends, specifically with respect to sustainability, also became a millstone around Tupperware’s neck. Consumers are increasingly critical of plastic due to concerns about sustainability and waste. As competitor brands pivoted toward eco-friendly alternatives, Tupperware was unable to follow in time.

According to Tupperware’s statement, following the appointment of a new management team, Tupperware has implemented a strategic plan to modernise its operations, bolster omnichannel capabilities and drive efficiencies to ignite growth. The company has made significant progress and intends to continue this important transformation work.

“We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process,” said Laurie Ann Goldman, president and chief executive of Tupperware. “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.

“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,” she added.

Richard Summerfield