Golden Guernsey plant files for bankruptcy protection
California-based OpenGate Capital, the parent company of the southeast Wisconsin-based Golden Guernsey, said it is seeking Chapter 7 bankruptcy protection for the milk bottling plant, which was abruptly closed last weekend.
OpenGate Capital acquired Golden Guernsey from Dean Foods in 2011, after Dean agreed to divest of the plant for antitrust reasons. Under a court settlement, Dean agreed to sell the southeastern Wisconsin plant and all assets related to fluid milk processing, including the right to continue the Golden Guernsey and La Vaca Bonita brands. The business manufactures, bottles and distributes its dairy products to schools, grocery stores, convenience stores and major retailers in Illinois, Michigan and Wisconsin.
Attorneys General in Illinois, Michigan and Wisconsin had joined the U.S. Department of Justice (DOJ) had joined in the lawsuit, U.S. et al. v. Dean Foods Co. The settlement was approved July 29, 2011 by Judge J .P. Stadtmueller, in the U.S. District Court for the Eastern District of Wisconsin/Milwaukee Division.
Since the acquisition, OpenGate said it had made vigorous efforts to reduce its expenses through discussions with its various suppliers, vendors, and the labor union.
"The reality is that the Golden Guernsey business was unable to achieve financial autonomy given the pressure to lower prices and seemingly nonnegotiable operating expenses," OpenGate CEO Andrew Nikou said. "Unfortunately, when expenses overwhelm revenue for too long, and we are unable to achieve cooperation from the people with whom we do business, the business cannot be sustained."
Nikou also noted that sales have been a little stronger since his firm took over the Golden Guernsey company in 2011, but has not been successful in negotiating lower overhead costs.
"The prospect of closing the plant and the potential for bankruptcy was raised on several occasions with these groups, all of which were provided with a clear picture of Golden Guernsey's fragile financial condition," said the company, which filed for bankruptcy protection in Delaware bankruptcy court. "Despite this, Golden Guernsey's efforts were rejected, leading to the closure of the business."