In a press release dated Jan. 5, Borden officials announced the company had filed for Chapter 11 in the U.S. Bankruptcy Court in the District of Delaware.
Headquartered in Dallas, Texas, Borden operates about a dozen milk processing plants and nearly 100 branches across the U.S. that produce and distribute nearly 500 million gallons of milk annually.
“We need to raise new investor capital so that we can continue to innovate with new products, modernize our facilities and equipment, and improve Borden’s ability to compete in today’s market,” according to Borden.
Documents posted on a separate “reorganization” website seek to differentiate Borden’s bankruptcy filing from that of Dean Foods, filed in early November 2019.
“These situations are very different,” the Borden statement said. “We believe that, from an operational standpoint, we are in a much better position than Dean Foods. Borden is EBITDA- (earnings before interest, tax, depreciation and amortization) positive and growing, which means we have solid earnings and are healthy. Dean Foods is not profitable. Borden intends to continue operations and strengthen our position to achieve long-term prosperity, whereas Dean Foods announced its intention to sell substantially all of its assets. We are confident that, once we fix our balance sheet, we will be equipped to win together in the market.”
According to Borden CEO Tony Sarsam, the company has filed legal motions as part of the court-supervised bankruptcy process, seeking to continue day-to-day operations while restructuring and reducing its current debt load. Among the motions, the company is seeking to pay “critical vendors” for goods and services, which may include raw milk suppliers. Borden purchases milk from both independently contracted producers and co-ops.
Borden will seek court approval for these requests during the coming days and “intends to work closely with creditors, customers and employees to identify restructuring plans that will benefit all stakeholders.”
Founded in 1857, last year marked several major milestones for Borden, and the company said its sales growth during the year outpaced the industry average.
"Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry," Sarsam said. "These challenges have contributed to making our current level of debt unsustainable.
“For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the company,” he said. “Ultimately, we determined that the best way to protect the company, for the benefit of all stakeholders, is to reorganize through this court-supervised process."
Founded in 1857 by Gail Borden Jr., Borden was the first company to develop a patent for the process of condensing milk, as well as the first company to use glass milk bottles. The company is now owned by ACON Investments LLC.
Borden has a large presence in the southeast U.S., with plants located in: Dothan, Alabama; Decatur, Georgia; Lafayette, Louisiana; Cincinnati and Cleveland, Ohio; Austin, Dallas and Conroe, Texas; Miami and Winter Haven, Florida; London, Kentucky; Hattiesburg, Mississippi; and North Charleston, South Carolina.
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