Do Good Foods’ Chapter 11 bankruptcy case converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Nov. 29 – KDC Agribusiness LLC, which does business as Do Good Foods, had its Chapter 11 bankruptcy cases converted to Chapter 7 by the U.S. Bankruptcy Court for the District of Delaware on Wednesday.

In a motion seeking the conversion, the company said the debtors have been “unable to favorably resolve the overhang” on their sale process caused by the unresolved trade secret litigation between the debtors and California Safe Soil, LLC (CSS), as previously reported.

As a result, and in light of the court’s ruling to lift the automatic stay and permit CSS to pursue its trade secret claims against the debtors in the chancery court, the company’s debtor-in-possession lenders became unwilling to advance any additional funds under the company’s $30 million DIP facility.

The company said that in the three months since the court’s entry of the lift-stay order, the debtors worked to broker a viable path forward with its stakeholders, including their DIP lenders and CSS.

In October, DIP administrative agent UMB Bank NA submitted a $4 million credit bid for the debtors’ brand assets, which would have covered allowed administrative expense claims incurred through the anticipated closing of the transaction, but CSS objected to the sale.

The company said that it has become apparent that no deal is possible under the current circumstances.

“With no prospects for a consensual sale of the brand assets and extremely limited liquidity, the debtors have concluded that they can no longer maintain these Chapter 11 cases in a responsible manner,” the company said in the motion.

KDC Agribusiness is a food waste recycling company based in Bedminster, N.J. The company filed bankruptcy on June 14 under Chapter 11 case number 23-10786.

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