NutraCea filed for Chapter 11 bankruptcy protection on November 10, 2009, saying that its business operations had been “impaired by tight liquidity” and that it intended to focus on its core business of stabilized rice bran, rice bran oil, nutraceuticals and baby cereal.
The company secured extra debtor-in-possession (DIP) financing of $6.75m from Wells Fargo Bank to allow it to continue with its day-to-day operations while it carried out its restructuring plans under Chapter 11. It already owed Wells Fargo $3.575m under an earlier credit facility, and the company has now paid back this financing in full, it said last week.
Chairman and CEO of NutraCea W. John Short said: "Over the course of the past year NutraCea has taken full advantage of the opportunities afforded by Chapter 11 of the US Bankruptcy Code to restructure our company and reposition our go-forward businesses.”
The company sold several non-core assets to fund its restructuring, including its NutraPhoenix property for $4.5m – the final asset related to an infant cereal business that it sold to Kerry Ingredients earlier this year – and a number of equine nutrition brands and trademarks. These sales also allowed NutraCea to pay Wells Fargo and set aside cash for partial repayment of its unsecured creditors.
“We have made excellent progress streamlining overheads, reducing debt and increasing profitable sales in our core businesses in the areas of SRB [stabilized rice bran], RBO [rice bran oil] and related products derived from stabilized rice bran," Short said.
NutraCea said that it had found 2008 to be a challenging year. Whereas in the past it had looked to equity funds for additional liquidity, the company’s financial position and the state of equity markets led it to file for bankruptcy to facilitate its restructuring.