Instant Brands, the Canadian-founded company behind popular kitchenware brands such as Instant Pot and Pyrex, has filed for bankruptcy protection. The company, owned by private equity firm Cornell Capital LLC, cites excessive debt and the impact of rising interest rates and tighter credit conditions as the reasons behind its decision. Instant Brands plans to continue its operations during the restructuring process, and it has secured $132.5 million in financing to support its efforts.
Instant Brands Seeks Chapter 11 Protection
Instant Brands and 14 of its affiliates have filed for Chapter 11 protection from creditors in the federal bankruptcy court in southern Texas. With approximately $1 billion in assets and liabilities, the company acknowledges that its debt burden has become unsustainable.
Operating Continuity During Restructuring
Despite the bankruptcy filing, Instant Brands intends to continue its operations throughout the restructuring process. The company aims to minimize disruptions to its business and meet its obligations to employees, suppliers, and customers.
By securing $132.5 million in financing, Instant Brands aims to ensure that it has the necessary capital to navigate the bankruptcy proceedings and support ongoing operations. The decision to seek bankruptcy protection allows Instant Brands to restructure its finances and address its liquidity issues.
Factors Contributing to Bankruptcy
Chief Executive Ben Gadbois attributes the bankruptcy filing to the tightening of credit terms and the impact of higher interest rates on Instant Brands’ liquidity levels. These market conditions made the company’s capital structure unsustainable.
The rising cost of borrowing, combined with the existing debt burden, put significant strain on the company’s financial health. Instant Brands’ decision to file for bankruptcy aims to provide an opportunity for debt restructuring and a path toward a more sustainable future.
Legal Issues and Marketing Practices
In addition to its financial challenges, Instant Brands faced legal issues related to its marketing practices. In January, the company reached a settlement with the U.S. Federal Trade Commission over allegations of falsely advertising Pyrex glass measuring cups as “Made in USA.”
The settlement required Instant Brands to pay a fine and revise its marketing practices to ensure accurate representation of its products’ origins. While not directly contributing to the bankruptcy filing, these legal matters have added to the company’s operational complexities.
Davis Polk & Wardwell and AlixPartners Provide Legal and Advisory Support
Instant Brands has enlisted Davis Polk & Wardwell as its legal counsel to guide the company through the bankruptcy process. Additionally, AlixPartners has been appointed as the restructuring adviser. These professional services firms will work closely with Instant Brands to navigate the complex legal and financial aspects of the bankruptcy proceedings and develop a comprehensive restructuring plan.
The bankruptcy filing by Instant Brands, the manufacturer of Instant Pot and Pyrex kitchenware, marks a significant development for the company. Facing substantial debt and challenging market conditions, Instant Brands has taken the step to seek Chapter 11 protection, allowing for debt restructuring and a path toward financial stability.
While operating continuity is a priority, the company will work closely with its legal counsel and restructuring advisor to navigate the bankruptcy process successfully. The outcome of this restructuring effort will determine the future trajectory of Instant Brands and its ability to regain stability in the highly competitive kitchenware industry.