Instant Brands, the maker of Instant Pot pressure cooker and Pyrex glassware, declared bankruptcy on June 12 amid sales decline.
The company filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court in the Southern District of Texas. Chapter 11 bankruptcy allows for a reorganization of the company rather than its liquidation in a Chapter 7 filing.
Instant Brands—which is also responsible for Pyrex cookware, CorningWare, Chicago Cutlery, and more—cited rising interest rates and tighter credit as contributing factors for the filing.
“After successfully navigating the COVID-19 pandemic and the global supply chain crisis, we continue to face additional global macroeconomic and geopolitical challenges that have affected our business,” said Ben Gadbois, president and CEO of Instant Brands, in a statement.
“In particular, tightening of credit terms and higher interest rates impacted our liquidity levels and made our capital structure unsustainable.”
The company added that it has seen rapid growth since the start of the pandemic, entering several new product categories and expanding its global footprint.
Court-Supervised Process
The privately held Illinois-based company listed between $500 million and $1 billion in both assets and liabilities, and said it has secured $132.5 million in additional financing from its existing lenders as part of its bankruptcy process.
The filing grants Instant Brands the “time and flexibility to continue ongoing discussions with all of its financial stakeholders in an effort to achieve a consensual path forward that strengthens the Company’s financial position,” according to a statement announcing the filing.
“Following court approval, this new financing, combined with cash generated from the Company’s ongoing operations, is expected to support the business during the court-supervised process,” the company reported on June 12.
In a letter to retailers, Gadbois disclosed that “retail partners remain our top priority” and that the company is expecting to fulfill stock requirements without interruption as Instant Brands attempts to strengthen its economic position through the bankruptcy filing. At the same time, Gadbois addressed its former employees and retirees in another letter, explaining that all benefits should still be met.
The bankruptcy filing under Chapter 11 allows a company to stay in business as it sheds debt and other costs it cannot afford. Several companies have filed for bankruptcy in a similar manner in the past, including General Motors and most of the nation’s major airlines, and gone on to subsequently report record profits.
While kitchen cookware products like Instant Pots became a must-have gadget before the pandemic, sales have slowed in the last two years, notably due to higher prices and inflation and budget-minded household consumers.
Sales of “electronic multicooker devices,” most of which are Instant Pots, reached $758 million in 2020, the start of the pandemic. Sales had plunged 50 percent by last year to $344 million.
Just last week, S&P Global downgraded the company’s rating due to lower consumer spending on discretionary categories and warned that ratings could fall again if Instant Brands seeks bankruptcy protection.
“Net sales decreased 21.9% in the first quarter of fiscal 2023, relative to the same period last year,” S&P analysts wrote. “This marked the seventh consecutive quarter of year-over-year sales contraction. Instant Brands’ performance continues to suffer from depressed consumer demand due to lower discretionary spending on home products.”
Instant Brands was acquired by private equity firm Cornell Capital in 2017, and it was merged with another kitchenware company, Corelle Brands. Instant Brands’ entities located outside the United States and Canada are not included in the Chapter 11 filings.
