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RONKONKOMA, N.Y. -- Atkins Nutritionals, the former heavyweight champion of the low-carb diet business, filed for bankruptcy protection yesterday, reported The New York Times.
The filing is the latest attempt to salvage a troubled company. Once a high-flier with surging sales, Atkins faltered as the diet fad it helped create started to wane and sales of low-carbohydrate products slowed in the second half of last year.
An Atkins spokesman, Richard Rothstein, said the company, which is privately held, had worked out agreements with a majority of its lenders that would give them equity in exchange for a reduction in debt. Rothstein said the company was seeking the bankruptcy court's approval for this plan and hoped to emerge from bankruptcy "before the end of the year."
A hearing is scheduled for today in United States Bankruptcy Court in Manhattan.
As it faced sagging consumer demand and a marketplace glutted with low-carb products last year, the company's operations quickly foundered, making it difficult for it to keep up with its loan obligations. Since late 2003, Atkins has been saddled with roughly $300 million of debt from a deal in which Goldman Sachs and Parthenon Capital, a private equity firm, bought a majority stake.
Atkins has been trying hard to cut costs. In September it started laying off 40 percent of its workforce, cut its 2005 marketing budget by almost half and hired AlixPartners, a turnaround firm that has worked with Kmart and the American businesses of Parmalat, the bankrupt Italian dairy group. It also cut the number of products it sells from 150 to 80.
Rothstein said the company had plans to lift sales by broadening its product offerings beyond the low-carb niche. "We're reaching out to a much broader market," he said. "Our products are for anyone interested in weight control or who is pursuing a healthy lifestyle."
CEO Mark S. Rodriguez said Atkins would focus on its "core nutrition-bar and shake portfolio."
Rothstein said that the bankruptcy proceedings would not affect sales and that in recent quarters the company's business had been "trending upwards."
The company was founded in 1989 by Dr. Robert C. Atkins, who died in 2003.