Tuna company Bumble Bee Foods filed for Chapter 11 bankruptcy protection on Thursday and agreed to sell its assets to Taiwan-based Fong Chun Formosa Fishery Company for approximately $925 million.
Changing appetites alone didn’t kill the tuna company. The company is filing for bankruptcy because of the debt incurred by “recent and significant legal challenges,” its president said in a press release. Specifically, she’s referring to a $25 million criminal fine from the Department of Justice, civil litigation from Bumble Bee customers, and related legal expenses, according to a declaration filed yesterday in bankruptcy court.
The legal troubles began in 2016. As we reported, wholesalers, retailers, and distributors, including Walmart and Kroger, began suing Bumble Bee, alleging it conspired with Starkist and Chicken of the Sea’s parent company to reduce tuna cans from six to five ounces while raising prices. It has settled with more than 30 of those companies out of court.
The federal government also sued Bumble Bee. In 2017, the company pled guilty to a felony charge for in the price-fixing conspiracy. Then, in a rare move, the Justice Department came after a corporate executive behind the scheme, indicting Bumble Bee’s former chief executive Christopher Lischewski for his alleged role.
Additionally, his lawyers have tried to omit an incriminating email from trial because it was based on a conversation made “over drinks.” Seafood executives described faking a car accident to avoid meeting with Lischewski, and a panicked encounter with FBI agents. Most recently, Lischewski’s lawyers accused a former Bumble Bee employee of “just making stuff up.”
The Taiwan fishery taking over Bumble Bee isn’t just its largest debtor. FCF is an enormous seafood supplier, and brokers and contracts fishing vessels in oceans around the world. It currently supplies nearly all of Bumble Bee’s albacore tuna, and a substantial portion of its skipjack, yellowfin, and bigeye, according to the court declaration.
The company will buy all of Bumble Bee’s assets, valued at over $930 million. The purchase comprises $275 million in cash, $17 million still owed to the Department of Justice, and over $638 million in debt.
Besides the court cases, the company has also been grappling with changing appetites. Consumption of canned tuna has dropped 42 percent over three decades, and some millennials don’t even own a can opener, The Wall Street Journal reports.
Brand loyalists, never fear. Bumble Bee says the sale won’t interrupt business—tuna and sardines will continue shipping out to supermarkets.