Country Club Foods Inc., the 50-year-old Kaysville-based snack-food maker, said Wednesday it has filed for Chapter 11 bankruptcy protection from creditors.
Filed Tuesday in the U.S. Bankruptcy Court for Utah, the action will allow Country Club to continue operations and to obtain relief from creditors while rebuilding the business.The bankruptcy filing comes two weeks after J. Myron Walker resigned as chief executive officer and a director of the company to pursue personal interests. Walker is the husband of Lt. Gov. Olene Walker.
Jordan Clements, the new president and chief executive officer of Country Club, said all of the stock in the company has been acquired by Peterson Interests, a Dallas firm that has opened an office in Salt Lake City.
Clements told the Deseret News Wednesday that there is no question of the company not emerging from the Chapter 11.
"We have a plan for restructuring and streamlining the company and fully expect to come out a prosperous company."
He said the timeline is still being worked out, but estimated it would take four to six months before Country Club emerged from bankruptcy.
Clements said the company now operates in 15 states with a total of 750 employees. He said the reorganization would include some reductions in the staff, but it was still unclear how many people would be let go.
Clements said he was brought in by Country Club's board of directors two weeks ago to turn the company around, and he is currently working on that plan. He said the bankruptcy filing was primarily the result of unexpected costs that resulted from the December 1994 merger of Country Club Foods with Clover Club Foods, another longtime Utah company that had become a division of Borden and the snack food division of Nalley's Inc.
"The consolidation of these . . . companies has been more expensive and time consuming than originally anticipated," said Clements. "In the last few weeks, we have hired new senior management members and have brought in the turnaround firm of Hickey & Hill as our financial restructuring advisers."
Clements said the company's reorganization strategy has the support of its "banking partner," Shawmut Capital, based in Sherman Oaks, Calif.
Tom Murphy, a vice president of Shawmut, said that, based on Country Club's restructuring plan, the bank has committed to provide "a significant level" of new funding, subject to court approval, to help in the turnaround.
Clements stressed that Country Club Foods continues to experience strong sales in the Intermountain West and anticipates no interruption in deliveries of its products to customers.
It is anticipated that the restructured company will consolidate its product lines and pull back its operations into a tighter geographic area, centered around Utah.
In December 1994, Country Club Foods, owned by the Walker family and doing business as Country Crisp, acquired Clover Club, also a longtime Utah business started by the Sanders family. Peterson Interests was the lender in the merger and has now acquired all of the company's stock.
Clover Club and Country Crisp remain as brand names of the company's products.
The Clover Club potato chip plant in Kaysville was cleared by state Agriculture Department officials in mid-October after sanitation problems had been corrected. During inspections this summer, officials found food contamination, pest infestations and unkempt facilities.