By Jonathan Randles, Bloomberg
Cooking television show America’s Test Kitchen has agreed to purchase recipe site Food52, which said it was forced to file bankruptcy after its lender unexpectedly swept cash from its bank accounts.
The offer from America’s Test Kitchen is worth $6.5 million and will gives Food52 a path out of Chapter 11 under new ownership. The stalking horse bid is subject to better offers should any materialize in the coming weeks. America’s Test Kitchen’s offer also provides Food52 with immediate access to cash to keep the business afloat as it seeks to complete the sale, according to court documents.
Food52 put itself and its other brands up-for-sale earlier this year and “engaged in herculean efforts to drive holiday sales” during the Thanksgiving holiday as well as Black Friday and Cyber Monday, Food52 Chief Executive Office Erika Ayers Badan said in court papers. But on Dec. 15 Food52’s lender Avidbank “with no forewarning” swept nearly all of the company’s cash held at the bank, including “the reversal of employee payroll and benefits, as well as funds held in trust to be remitted to the federal government,” Badan said.
“Overnight, the company found itself scrambling for survival,” Badan said.
Avidbank did end up authorizing the return of cash to cover Food52 employee’s payroll and 90% of its health insurance premiums, Badan said. The actions by the bank led Food52 to terminate most of its workers and forced its remaining employees to work around-the-clock to keep the the company in business, she said.
Food52 has struggled following a Covid-19 era boom, saying in court papers that “the pivot from growth-at-all-costs to a model of responsible, profitable growth proved elusive to achieve.” The business has been burdened with high operating costs, “unfavorable legacy contracts, outdated technology, and lack of scalable systems,”
“We believe Food52 remains a singular media property with a strong legacy and we are excited to build on that to continue to serve Food52 fans,” America’s Test Kitchen CEO Daniel Suratt said in a Tuesday press release.
Avidbank didn’t immediately return a message seeking comment.
Food52 sought court protection on Dec. 29 in Delaware, listing assets of at least $1 million and liabilities of at least $10 million on its Chapter 11 petition. The offer from America’s Test Kitchen includes as much as $3.42 million in Chapter 11 financing, which would be considered part of the proposed purchase price, according to court documents.
The case is Food52 Inc., number 25-12277, in the US Bankruptcy Court for the District of Delaware.
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