News

Dean Foods approved for bankruptcy; bondholders want fair market sale

Dean Foods has been approved for Chapter 11 bankruptcy, but questions remain if DFA can buy most of its assets.

A federal court has approved access up to $475 million of the $850 million in committed debtor-in-possession financing from existing lenders, which is expected to support the company’s continued operations as it looks for a buyer.

Dairy farmer suppliers to one of the nation’s largest milk processors have been told they do have a home for their milk as Deans restructures.

While Deans claims it’s in advanced discussions with Dairy Farmers of America to sell most of their assets, a deal must pass an antitrust review.

During the bankruptcy hearing, an attorney for a third of the company’s bondholders said that while Deans is “focusing exclusively” on a combination with DFA, isn’t “value-maximizing.” Bondholders don’t want a quick-fire sale, but rather an opportunity for other interested parties to submit proposals based on the company’s true market value.

Deans sources about 60 percent of the milk it processes from DFA while only accounting for about 20 percent of DFA’s sales.