Jays Foods Inc., the Chicago-based chipmaker that filed for bankruptcy protection late Thursday for the second time in three years, said Friday that “some job reductions are inevitable” and didn’t rule out the possibility that its South Side plant could eventually close.
In default on some of its loans and faced with what it calls “an acute liquidity crisis,” Jays and sister company Select Snacks Inc. struck a tentative deal on Thursday to sell its assets to another food company. But that transaction could unravel. Because of this particular type of Chapter 11 bankruptcy proceeding, Jays and Select may accept bids from other interested parties for all or some assets in hopes of generating as much money as possible to repay creditors.
“What changes when you go into bankruptcy is we’re working for the benefit of the creditors, so we have to run the business responsibly in the interim” until it’s sold, said Jeff Dunn, chief executive of Ubiquity Brands LLC, the Chicago-based parent of Jays and Select.
In a conference call earlier in the day, he noted that “some job reductions are inevitable.”
Asked in an interview later on the timing of possible layoffs, Dunn replied, “We haven’t determined what we’re going to do yet.”
Dunn said the primary assets being sold include a plant in Jeffersonville, Ind.; equipment in Chicago; the distribution system; and the brands themselves.
He explained that Jays Foods leases its plant at 825 E. 99th St.
Until its future ownership is sorted out, Jays and Select, which makes private-label brands for retailers, are expected to maintain their operations and continue to sell such lines as the namesake Jays, as well as Krunchers and Kettle Chips.
But asked in an interview whether the East 99th Street plant could close, Dunn said “anything is possible.”
“What we’ve got to do is run the business for the creditors in the best way possible in this interim period,” Dunn said. “So we’ll make those determinations over the coming weeks about what that means.
“It could be price increases. It could be anything.”
Jays has 681 workers, including 236 union workers, according to court documents.
Of those, about 300 work in the plant, warehouse and administrative offices on the South Side, Dunn said. Jays also has about 200 route drivers.
Chicago Ald. Michelle Harris, who represents the area around the Jays facility, couldn’t be reached for comment Friday.
Tentative deal
The prospective buyer for most of the assets is Jay’s Acquisition Inc., which has signed a tentative $24.8 million deal to buy most of the assets for Jays Foods as well as Select Snacks.
In the conference call, Dunn didn’t elaborate on who Jay’s Acquisition is, except to say that it’s a strategic buyer unrelated to or affiliated with existing Jays Foods or Select officers or owners.
Among the businesses that have talked to Jays about a possible purchase is privately held Snyder’s of Hanover, a Hanover, Pa.-based company known for hard pretzels in brown packaging.
According to the bankruptcy filing, Jays’ 30 biggest unsecured creditors include: Black Horse Carriers of Carol Stream, owed $481,000; Columbus Foods Co. of Chicago, owed $475,000; Outstanding Personnel Service Inc. of Chicago, owed $688,000; and William Hoekstra Potato Farm of St. Anne, owed $433,000.
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byerak@tribune.com
