Lenders to Borden Dairy Co. slammed the milk producer for filing what they said was “a surprise and value-destructive bankruptcy” aimed at benefiting its private-equity backer Acon Investments, the Wall Street Journal reported. KKR & Co.’s credit arm in court papers yesterday said that Borden had “no economic justification” for its sudden decision to file chapter 11 protection after lengthy negotiations with creditors aimed at avoiding bankruptcy. Borden, a 163-year-old milk producer known for its spokes-cow Elsie, had “an almost fully-baked out-of-court restructuring solution” in hand but instead “recklessly” entered an “economically irrational” bankruptcy without identifying a financing source to keep the company running, according to the objection. KKR, a lender under a $175 million term loan, said it wasn’t given any notice about the filing or a sense of what Borden hoped to accomplish through chapter 11. KKR said the company’s strategy “seems to boil down to somehow using the bankruptcy process to negotiate a transaction that will be more advantageous to Acon,” which took a major stake in Borden in 2017. PNC Bank NA, another lender that said it is owed $94.6 million, also alleged in court papers that Borden filed for bankruptcy without advance notice or a chief restructuring officer, financial adviser or investment banker. Both lenders objected to Borden’s request to use available cash and securities to pay more than $56 million in claims to vendors, customers, utilities, employees, insurers and tax authorities. The company’s debts include $255.8 million in secured loans and a $33.2 million settlement with a pension fund.
