Instant Brands, the company that owns Instant Pot and Pyrex Maker glassware, has filed for Chapter 11 in Texas, according to a recent press release. The company blames the COVID-19 pandemic and supply chain issues for putting them nearly $1 billion in debt. High interest rates and waning access to credit were also factors in the Chapter 11 filing.

Chapter 11 means that the company will continue to operate while it is in bankruptcy and repay what it can repay based on current and projected earnings through the remainder of 2023. However, it could also mean significant downsizing, and workers may be laid off as the company figures out how to repay its creditors. 

What Factors Placed the Company in Bankruptcy?

In some cases, a company will become too large too fast. At least some have attributed this bankruptcy filing to an effort to grow at all costs, borrow too much money, and over-produce demand for its products. In cases like this, it is not a matter of how good the product is. It is a matter of dollars and cents. 

Demand for Instant Pots significantly declined in 2020 despite the product being a hit with consumers. Since this product is directly responsible for their growth in the first place, a failure of the product to remain popular through the pandemic accounts for significant losses. 

The company has a lifeline of $130M to help them through the Chapter 11 bankruptcy process, but it remains unclear whether or not the company will survive. It hopes to, which is why it has filed for Chapter 11. 

A Chapter 11 bankruptcy works similarly to a Chapter 13 for individuals. While individuals can file for Chapter 11, they won’t unless they absolutely have to. Companies, on the other hand, only have two choices: Chapter 11 and Chapter 7. If a company files for Chapter 7, the company is dissolved, and all of its assets are liquidated to repay creditors whatever can be repaid. In Chapter 11, a bankruptcy trustee takes over the management of the company’s assets. Some assets would be sold off, while others would be retained. Creditors would be presented with a repayment plan based on the company’s current liabilities. It is not a good position for a company to be in, but it is certainly preferred over the dissolving of the company. 

When the company introduced Instant Pot to the market, it had four founders and a modest payroll. The company ballooned to 1,900 employees and, since 2020, has laid off nearly 15% of its workforce. In other words, the company grew too quickly and found itself unable to pay its employees. 

Talk to an Indiana Bankruptcy Attorney Today

Chris Arrington represents the interests of Indiana residents who are filing for bankruptcy. Call today to schedule a free consultation, and we can begin discussing your next moves immediately.