Leiner bankruptcy plea amplifies annus horribilis
Products, has filed for bankruptcy protection amid an ongoing
period of misfortune.
Three of Leiner's affiliates also filed for protection from creditors, one of which, a US bank, was demanding $150m. About 30 creditors were listed in the complaint. Leiner says a group of lenders has agreed to inject $74m into the company so it can continue operating albeit in a limited capacity. Leiner has more than 2000 Leiner-branded as well as private-label products on sale in North American food, drug, mass merchant and warehouse club outlets. Retailers include Sam's, Costco and Kroger's. The company stated it will continue trading as per normal. "Although we have already taken many steps to address the challenges that arose following our March 2007 decision to voluntarily suspend OTC operations by streamlining our operations and manufacturing footprint, these actions were not enough to offset the cost of our substantial debt obligations," said Leiner president and CEO Rob Reynolds. Troubled times The March withdrawal of its entire OTC range was prompted by a Food and Drug Administration (FDA) inspection that took issue with its good manufacturing practices (GMPs) and which led to the closure of one its plant in South Carolina. Leiner did, and does, however continue to manufacture dietary supplements from its Californian and Canadian factories that include most vitamins and minerals as well as specialty supplements such as CoQ10 and glucosamine and a range of herbs. "From an operational standpoint, we intend to continue to provide our customers with the quality and service on which they depend and to meet our post-petition obligations to suppliers and other business partners," the company said. Leiner's year of woe was compounded in February when CEO Robert Kaminski resigned to be replaced by Reynolds, who was the former chief operating officer. "Filing for [bankruptcy] allows Leiner to enhance its liquidity and to initiate a formal process for restructuring our debt and exploring the company's sale in a timely manner," Reynolds said. In response, Standard & Poor's Ratings Services lowered Leiner's credit rating to 'D' from 'CCC'. S&P's did however indicate Leiner's senior secured lenders, who have not been disclosed, could expect meaningful recovery in the reorganization process. Not two weeks ago Leiner Health Products was being hailed by market researcher Global Industry Analysts as a key global dietary supplements player alongside the likes of Archer Daniels Midland, BASF Human Nutrition, GlaxoSmithKline, Arkopharma, Natrol, NBTY, Nutraceutical Corporation, Ocean Nutrition Canada, Perrigo Company, Valensa International and Wyeth Nutrition. Leiner's bankruptcy filing does not include its Canadian subsidiary.
