Libbey, one of the world’s largest makers of glass tableware, filed for Chapter 11 bankruptcy on Monday, citing the “unprecedented” impact of the coronavirus pandemic on demand for its products.
The company had been pursuing a restructuring of its balance sheet even before the pandemic forced it to close its factories in Toledo, Ohio, and Shreveport, La., and virtually shut down its restaurant sales channel.
A seven-year, $440 million loan was scheduled to mature last month.
But Libbey said Monday that it had been “unable to offset the steep decline in sales” resulting from the pandemic, leaving it with no choice but to file bankruptcy for the first time in its 202-year history.
“While we entered 2020 with positive momentum from our strong finish in 2019, the dramatic and prolonged impact of COVID-19 on the demand for our products and on our business is truly unprecedented in Libbey’s more than 200-year history,” CEO Mike Bauer said in a news release.
Libbey’s lenders have agreed to provide up to $160 million in financing to keep it operating during the Chapter 11 process. “Entering this process is a necessary step to address our liquidity, strengthen our balance sheet and better position Libbey for the future,” Bauer added.
The company, which was founded in 1818 as the New England Glass Company, sells products such as tumblers, stemware, mugs, bowls, shot glasses, canisters, and candleholders through food-service, retail and business-to-business channels.
Food-service sales in the U.S. and Canada have been declining due to “take-out and delivery increasing in popularity relative to in-restaurant dining,” Brian Whittman, Libbey’s restructuring consultant, said in a court declaration.
Other headwinds, he said, have included the migration of consumer purchasing from brick-and-mortar stores to online commerce and “increased competitive pressures in Latin America, as Chinese manufacturers divert sales of their products from the U.S. market to Latin America in order to avoid the increased tariffs imposed by the United States on Chinese imports.”
Bauer said Libbey is already seeing some improvement in demand with the gradual lifting of stay-at-home restrictions and the resumption of production in Toledo and Shreveport.