WASHINGTON: Tupperware Brands Corp hammered out a deal for its creditors to acquire the business, ending a dispute that’s risked a liquidation of the iconic company after a push from the federal judge overseeing the bankruptcy.
An ad-hoc group of lenders and the bankrupt firm reached an agreement-in-principle, in which the lenders will purchase the business in cash and credit, according to Spencer Winters, a lawyer representing the debtor at a Tuesday (Oct 22) hearing in Delaware.
Both sides acknowledged the influence that Judge Brendan L. Shannon had in pushing them to settle a dispute that threatened to shut down the company, which sells its plastic containers through 465,000 door-to-door salespeople around the world. It fell into bankruptcy after its food-storage products faced weakening demand as competition heated up and Tupperware failed to keep up with the changing pace of retail.
"It was in large part through the court’s efforts that the parties were able to get over the finish line,” lender attorney, Allan S. Brilliant, said in court on Tuesday.
Last week, Judge Shannon interrupted a court fight between Tupperware and lenders, asking lawyers from both sides to meet him for a closed-door conference. The two sides had been arguing over Tupperware’s use of cash it was holding as collateral and the lenders demand that the company drop its reorganisation effort and liquidate instead.
After they emerged from that Oct 18 meeting, both sides suspended their battle and huddled in the hallways of the bankruptcy courthouse in Wilmington, Delaware. They agreed to return to court on Tuesday and negotiated a deal to sell the Tupperware brand and some of its operations to the lenders - including investment funds affiliated with Alden Global Capital and Stonehill Institutional Partners.
"This is not a typical sales format,” Judge Shannon concluded at the Tuesday hearing. "I appreciate the parties’ engagement on difficult issues and the creative approach that they’ve developed.”
Under the deal, the lenders will pay US$23.5 million in cash and swap $63.8 million in debt they hold for ownership.
The two sides will work out details of the sale contract in the next few days and return to court next week for final court approval.
The company faces more than $800 million in unpaid debts. The lenders who were fighting Tupperware are owed more than $460 million, giving them a majority of the company’s long-term debt, according to court papers. - Bloomberg
