Dean Foods confirms chapter 11 plan, following sales of assets to six acquirers

Davis Polk has served as lead counsel to Southern Foods Group, LLC, Dean Foods Company and certain of their affiliates (collectively, “Dean Foods”) in connection with their chapter 11 proceedings in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

With a history dating to 1925, Dean Foods was a leading public food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States. Headquartered in Dallas, Texas, the Dean Foods portfolio included DairyPure, the country’s first and largest fresh, national white milk brand and TruMoo, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena, Berkeley Farms, Country Fresh, Dean’s, Friendly’s, Garelick Farms, LAND O LAKES milk and cultured products, Lehigh Valley Dairy Farms, Mayfield, McArthur, Meadow Gold, Oak Farms, PET, T.G. Lee, Tuscan and more.

On November 12, 2019, Dean Foods filed voluntary chapter 11 petitions with the Bankruptcy Court. In connection with the chapter 11 filings, Dean Foods entered into a $425 million DIP credit facility with certain of its prepetition revolving lenders and the administrative agent, as well as a $425 million amended securitization facility. By early May 2020, the Bankruptcy Court approved and Dean Foods closed on the sale of substantially all of their assets and operations pursuant to section 363 of the Bankruptcy Code in seven sales to six third-party purchasers for aggregate consideration of approximately $545 million. These transactions followed a robust and contentious sales and marketing process that included resolution of antitrust challenges brought by the United States Department of Justice and certain state attorneys general in connection with the two largest sales to Dairy Farmers of America, Inc. and Prairie Farms Dairy, requiring only minor modifications and post-closing divestitures. With a small core team of remaining employees and the assistance of Davis Polk and its other advisors, Dean Foods proceeded to wind down its remaining estates, including through the collection of $102 million in tax refunds and nearly $500 million in outstanding receivables, the sale of over $75 million in remaining real property assets and the establishment of protocols for the reconciliation and payment of administrative expense claims that participated in a Bankruptcy Court-approved discount program.

On January 29, 2021, the Bankruptcy Court approved Dean Foods’ Disclosure Statement and the solicitation of the proposed chapter 11 plan of liquidation (the “Plan”). The Plan was ultimately accepted by at least one impaired class at each Dean Foods entity and approximately 85% of all of the Holders of claims that voted. On March 17, 2021, the Bankruptcy Court confirmed the Plan over the objection of the U.S. Trustee. Pursuant to the Plan, on the effective date, all remaining assets of Dean Foods shall immediately be transferred to, and vest in, a liquidating trust (the “Liquidating Trust”). The Liquidating Trust will be administered by a liquidating trustee for the sole purpose of liquidating and administering the remaining assets and making distributions as provided for under the Plan.

The Davis Polk restructuring team includes partner Brian M. Resnick, counsel Steven Z. Szanzer and associate Nate Sokol. The corporate team includes partners Louis L. Goldberg and Harold Birnbaum. The finance team includes partner Hilary Dengel. The capital markets team includes partner Nicholas A. Kronfeld. The litigation team includes partner Elliot Moskowitz. Partner Arthur J. Burke provided antitrust advice. Partner William A. Curran provided tax advice. All members of the Davis Polk team are based in the New York office.