Confectionery maker Hearthside files for bankruptcy after child probe by Reuters
Written by Dietrich Knauth
NEW YORK (Reuters) – Hearthside Food Solutions filed for bankruptcy protection on Friday, seeking to reduce $1.9 billion in debt and restructure its operations after an investigation into child labor at factories where it made granola, breakfast cereals and snacks.
Hearthside said it has never deliberately hired young people at its facilities, and has cut ties with third-party staffing companies and tightened its employment practices after February 2023. New York Times (NYSE:) article reported that migrant children worked in unsafe conditions in Hearthside factories to make Chewy (NYSE:) granola bars and Lucky Charms and Cheetos packaging bags.
Hearthside denied allegations that its workplaces were unsafe, but said the article led to “immediate and negative” consequences, including a government investigation and scrutiny from the media and Hearthside’s customers.
Hearthside said the investigation did not result in a fine, and was not the primary reason for the bankruptcy filing.
Hearthside, privately owned by Charlesbank Capital Partners (WA:) and Partners Group, filed for bankruptcy in Houston, Texas bankruptcy court, seeking to complete a restructuring that will eliminate $1.9 billion in debt and secure $200 million in new investments.
The company’s lenders have agreed to support the restructuring and provide another $150 million bankruptcy loan, according to Hearthside.
“We’ve taken a decisive step across our company to address our previous challenges, and we’re encouraged by the progress we’ve seen,” Hearthside CEO Darlene Nicosia said in a statement.
Hearthside will continue to operate as usual during its Chapter 11 case, and aims to emerge from bankruptcy in the first quarter of 2025. Interbake Canada’s corporate operations are not part of the Chapter 11 filing.
Based in Downers Grove, Illinois, Hearthside employs more than 12,000 people in 28 facilities that provide baked goods, snacks, nutrition facilities and food packaging services to customers in the food and snack industry.
