Borden Dairy Co. has filed for Chapter 11 bankruptcy, becoming the second major dairy company to do so.
The Dallas based company said in a press release it “intends to use the court process to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the Company for long-term success.” The company will continue to operate normally as it pursues a financial restructuring process.
Tony Sarsam, CEO of Borden Dairy Co., said in a statement that rising costs of raw milk and market challenges led to the decision to file for bankruptcy. Bloomberg reports the price of raw milk has risen up to 27% since January 2019 and is still expected to rise despite retail prices dropping.
“These challenges have contributed to making our current level of debt unsustainable,” he said.
In addition to rising milk prices, consumers are also buying less dairy milk, opting instead for plant-based alternatives like soy, rice, oat and nut milk.
“While milk remains a household item in the United States, people are simply drinking less of it,” Borden CFO Jason Monaco told Bloomberg. said. “In parallel, since the turn of the century, the number of U.S. dairy farms has rapidly declined.”
The company was founded in 1857 and is known for its cow mascot, Elsie. According to Bloomberg, Borden listed assets and liabilities between $100 million and $500 million in its filing.
Dean Foods, America’s largest milk producer also filed for bankruptcy in November 2019. According to CNN, the company’s sales dropped 7% in the first half of 2019, profit fell 14% and Dean Foods stock lost 80%.