Many times a company enters Chapter 11 with a plan for reorganization. Sometimes that's a fully formed plan where creditors and lenders have signed off because it makes sense for everyone involved to keep the company operating.
A lot of times, however, a company filing Chapter 11 has expectations and ideas, but it still needs to get its creditors, vendors, and lenders to agree to it. When that happens, the entire situation can be a house of cards.
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If one pillar of the house decides it doesn't like the plan, then the whole thing can quickly come crashing down. In addition, no matter what the plan or how widely agreed to it is, the bankruptcy court gets a say.
It's rare, but the court could decide that it does not like a deal for a number of reasons. When any of those things happen, a Chapter 11 bankruptcy can easily become a Chapter 7 liquidation where any remaining assets get sold off.
Lenders generally get pennies on the dollar in a Chapter 7 liquidation. That gives both lenders and vendors an incentive to work together to find a path to keep the brand operating.
That's what's happening with Instant Brands, the maker of the popular Instant Pot, which filed for Chapter 11 bankruptcy in June.
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Instant Brands has a deep portfolio
While it gained fame with the Instant Pot, a modern take on a pressure cooker, it also owns a number of other brands including Corelle, Pyrex, Snapware, CorningWare, Visions, and Chicago Cutlery. Its signature product spurred its growth, but while the company tried to expand the line with sauce packets and other Instant Pot-branded products, they weren't needed by consumers.
Unlike a Keurig coffee maker which ties owners into buying KeurigDrPepper (KDP) K-Cups, Instant Pots were generally a one-time purchase. If used properly, the pressure cookers also last for years, so with many customers after the original purchase, no further sales were made.
At the time of the bankruptcy filing, Instant Brands shared that one or more of its products was in 90% of American homes. The size of the Instant Pot market, which would include versions not made by Instant Brands, was estimated to be $4.7 billion in 2022. That was expected to double by 2031, according to Transparency Market Research.
Instant Brands will survive with new owners
Instant Brands entered bankruptcy with a plan to be purchased in a two-part transaction by Centre Lane Partners. Its previous owner, private equity firm Cornell Capital bought the company in 2019.
Now, the U.S. Bankruptcy Court for the Southern District of Texas has approved the bankruptcy reorganization plane and the company will soon emerge from the bankruptcy process.
"With the Court's confirmation, Instant Brands is proceeding with a reorganization of its housewares business and transitioning ownership to the company's lenders. The Company will obtain exit financing from its lenders upon consummation of the Plan and anticipates emerging from Chapter 11 by the end of the month," the company shared in a press release.
Under the plan, the company has already transferred control of its applaince to Center Lane. That business includes the Instant Pot. Now, with court approval, it's moving forward with the second transaction.
"We have achieved the goals we set out when we initiated this process. Last November we separated and sold our appliances business, and set that business up for success under new ownership. For our housewares business, we have continued driving strong performance with market share gain in key categories and secured a bright future for our iconic housewares brands," CEO Ben Gadbois shared.
