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Law360 (June 10, 2020, 10:45 AM EDT) -- Maines Paper & Food Service Inc., a food distributor that counts Burger King, Longhorn Steakhouse and Olive Garden among its clients, sought Chapter 11 protection in Delaware early Wednesday with $50 million to $100 million in debt, weeks after being taken into foreclosure.
Food distributor Maines Paper & Food Service, which counts Burger King and other major restaurant chains among its clients, filed for Chapter 11 protection Wednesday. (AP Photo/Jeff Chiu)
Terms provided by Lineage, the world's largest refrigerated warehousing and logistics firm, were said to have included payment of $5.2 million to fund a Chapter 11 wind-down of the former family-owned company.
Maines had been struggling with the effect of pandemic related shutdowns across the industries it serves. It also was recently sued for millions in federal court by some of its major customers — including poultry giant Perdue Farms and Koch Meat Co. Inc. — for breach of contract after stopping payments for food products. Koch alone sought more than $2.5 million, according to filings in the U.S. District Court for the Northern District of New York.
The former family-owned business, headquartered in Conklin, New York, reported sales topping $3 billion annually in recent years. It was nevertheless acquired by a Lineage Logistics affiliate last month under a strict foreclosure agreement covering all of Maines' assets, inventory and receivables.
In addition to funding Maines' wind-down plans, which were not described in detail, Lineage agreed to fund payment of some prepetition debts, including outstanding sale and use tax bills as of the foreclosure date and some debts to suppliers of perishable goods.
Maines, which served customers in more than 30 states across the Northeast, South and Midwest, counted a number of major restaurant chains among its 2,500 customers.
Regular business at many of those outlets stopped abruptly earlier this year across the nation's most densely populated areas as states and localities announced stay-at-home orders and social-distancing restrictions.
Plans for the Chapter 11 have not yet been disclosed, although a company resolution included with the initial bankruptcy filing said the action was preceded by a review of Maines' historical performance, long term liabilities and possible need to liquidate.
The company retained Pachulski Stang Ziehl & Jones LLP as bankruptcy counsel and John C. DiDonato of Huron Consulting Services LLC as chief restructuring officer.
Maines listed Burger King's supply chain manager, Miami-based Restaurant Services Inc. which is owed $11.8 million, as its largest unsecured creditor, with Coca-Cola North America ranked second at $11.4 million.
Maines and its affiliates are represented by Laura Davis Jones, David M. Bertenthal and Timothy P. Cairns of Pachulski Stang Ziehl & Jones LLP.
Lineage Logistics is represented by Michael R. Nestor of Young Conaway Stargatt & Taylor LLP and Peter M. Gilhuly and Nacif Taousse of Latham & Watkins LLP.
The case is In re Maines Paper & Food Service Inc., case number 1:20-bk-11502, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Alyssa Miller.
Update: This story has been updated with more details.
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