The manufacturer of Cheetos has revealed the fate of the popular food snack after declaring bankruptcy following a child labor scandal.
Despite its parent company declaring bankruptcy, Hearthside Food Solutions – which also produces products for brands such as Kraft, Kellogg’s, Mondelez, General Mills and PepsiCo – has said it intends to continue operations as normal.
This means Cheetos, and other popular snacks such as Lucky Charms and PepsiCo’s Lay’s potato chips, will still be available to buy as usual.
Parent company H-Food Holdings LLC filed for Chapter 11 bankruptcy on November 22, after racking up $1.9 billion in debt.
Hearthside Food Solutions, which is based in Downers Grove, Illinois, said it will continue paying worker salaries and benefits, maintaining customer programs, and honoring vendor obligations.
To fund these operations throughout the bankruptcy process, the company filed a motion seeking approval for $300 million in financing.
Hearthside CEO Darlene Nicosia said in a statement: ‘We have taken decisive action across our company to put our past challenges behind us and are encouraged by the improvement we have already seen.
‘Today’s announcement marks an incredibly important step forward for Hearthside, our valued customers, and our dedicated team as we continue to transform our business for the future,’ said Nicosia.
Hearthside Food Solutions – which also produces products for brands such as Kraft, Kellogg’s, Mondelez, General Mills and PepsiCo – has said it intends to continue operations as normal
She continued: ‘With a sustainable capital structure and a significant infusion of new capital to fund our long-term plan, we will be well-equipped to enhance our leadership in the food manufacturing industry as we drive continued innovation and growth.’
The company aims to come out of bankruptcy by the first quarter of 2025.
The bankruptcy filing comes after the company came under scrutiny over allegations of child labor in its snack factories.
In February 2023, The New York Times reported that migrant children worked in unsafe conditions at Hearthside Food Solution’s facilities to produce their products.
The company said it never knowingly employed underage labor at its factories and denied allegations that its work environment was unsafe.
The company said it had cut ties with third-party staffing agencies and strengthened its employment practices following the report, according to The Sun.
The article resulted in backlash from media and customers as well as ‘immediate and severe’ consequences such as government investigations.
Hearthside Food Solutions added that the investigation resulted in no fines and was not the main reason for the bankruptcy filing.
It is one of many companies which have filed for bankruptcy this year.
Parent company H-Food Holdings LLC filed for Chapter 11 bankruptcy on November 22, after racking up $1.9 billion in debt
The bankruptcy filing comes after the company came under scrutiny over allegations of child labor in its snack factories
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Stoli Group USA, which owns the namesake Stoli brand vodka, filed for bankruptcy late last month as it is experiencing ‘financial difficulties.’
The company said it has also been a victim of a major cyberattack, and has been involved in an ongoing legal battle with the Russian government for several years which has cost ‘dozens of millions of dollars.’
Retail companies, in particular, have also struggled with rampant theft in stores and increasingly tight margins.
The latest high profile chain to file for bankruptcy was discount retailer Big Lots in September.
Big Lots announced its latest round of store closures in November, as it moves through its bankruptcy proceedings.