Lenders are condemning Borden Dairy for its unexpected bankruptcy declaration made Monday, according to court papers.
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Investment firm KKR & Co. Inc., which lent $175 million to Borden, called the filing “a surprise and value-destructive bankruptcy” that it says was made in the interest of its private-equity backer, Acon Investments, The Wall Street Journal reported Wednesday.
KKR said in court papers Tuesday that Borden had “no economic justification” for its decision to file for Chapter 11 bankruptcy. The investment firm accused Borden of having “an almost fully-baked out-of-court restructuring solution” prepared but “recklessly” declared an “economically irrational” bankruptcy, according to the Journal.
KKR added it was given no warning about when or why the dairy producer decided to file for bankruptcy, but it “seems to boil down to somehow using the bankruptcy process to negotiate a transaction that will be more advantageous to Acon,” the Journal reported.
Borden also owes $94.6 million — of a total $255.8 million is owes in secured loans — to PNC Bank NA, which also said in court papers that Borden gave no warning of its filing.
PNC and KKR declined Borden’s request to use its remaining cash to pay off $56 million in claims to vendors, according to the Journal.
An Acon spokesperson told the Journal it has derived no benefit from the bankruptcy filing and “it is safe to say that KKR’s assertions are at a minimum deeply misinformed.”