Reuters in New York reported in “Harry & David in bankruptcy as gift sales fall” on March 28, 2011 that Harry & David Holdings Inc, the Oregon based mail-order gourmet food company, filed Chapter 11 bankruptcy in March 2011. The weak economy has led consumers and businesses to cut spending on fruit baskets. Harry & David failed to make interest payments on about $200 million in debt, as its sales and profits dropped. To clear inventory, the company discounted products. Its existing lenders are UBS and Ally Financial.
The Chapter 11 gives bondholders control of the company. The company is a debtor in possession. Usually in a Chapter 11, a trustee is not appointed to take over the bankruptcy estate. Harry & David was started by Samuel Rosenberg’s sons when they started selling pears by mail. The Harry & David bankruptcy agreement involves converting $198 million senior debt into equity. Normal operations continue during the reorganization. Chapter 11 of the Bankruptcy Code usually referred to as “reorganization” bankruptcy usually involves a corporation or partnership. A Chapter 11 debtor proposes a reorganization plan to keep operations going and pay creditors over time. In a Chapter 11, the debtor files these documents with the court:
- schedule of executory contracts and leases not expired;
- schedules on assets and liabilities;
- schedule on current income and expenses;
- statement on financial affairs.
Each year, Harry & David hired 6000 workers for the holiday season to pick and pack fruit in baskets, shipped around the world, including New York. Many New York companies ordered from Harry & David for corporate gifts. Its most often ordered fruit baskets include wine, pears, pineapples, cherries, apples, chocolate that serve 4-6 people. The prices range from under $20 to over $200. When people order online, they can create their own baskets. The future of Harry & David are in the hands of Alvarez & Marsal, a restructuring company in New York.
Harry & David owners include affiliates of private equity firm Wasserstein & Co, and hedge fund Highfields Capital Management. Harry & David operates 70 stores, mostly in malls. Besides fruit, the company sells bakery goods like Wolferman’s English muffins, floral gifts, and Moose Munch popcorn snacks. There are several stores in New York, including one at Lake George Plaza Factory Outlets in Lake George, NY, another at Tanger Outlets of Riverhead in Riverhead, NY, and one at Waterloo Premium Outlets in Waterloo, NY.
Contact an experienced New York bankruptcy attorney for help on individual, small business, and corporate bankruptcies.