Milk and dairy product producer Dean Foods (DF) has announced that it has filed for Chapter 11 bankruptcy protection. The bankruptcy filing affects all of its subsidiaries as the company looks to sell off all its assets to Dairy Farmers of America.

The company said the bankruptcy restructuring is part of an effort to “protect and support its ongoing business operations.” Dean Foods is also looking to address its debt and unfunded pension obligations.

Dean Foods has secured $850 million in debtor-in-possession financing, led by Rabobank. The DIP financing will be used in conjunction with the company’s cash on hand to continue its operations, pay employee wages and benefits, and continue to pay its suppliers and vendors.

“The actions we are announcing today are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business," Eric Beringause, president and CEO at Dean Foods, who joined the company approximately three months ago, said.

"We have a strong operational footprint and distribution network, a robust portfolio of leading national brands and extensive private label capabilities, all supported by approximately 15,000 dedicated employees around the country.

“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption. Importantly, we are continuing to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting our dairy suppliers and other partners,” he added.

The sale of the company will entertain other bids through its bankruptcy filing and start the process of reorganization for the company upon court approval.

Dean Foods has been challenged by consumers changing preferences towards nondairy milk and private-label products, CNBC reported. Milk consumption per capita has fallen by 26% in the last two decades, according to the U.S. Department of Agriculture data (via CNBC).

Davis Polk & Wardwell LLP and Norton Rose Fulbright are serving as legal advisors to Dean Foods while Evercore is acting as the investment banker for the company. Alvarez & Marshal is the company’s financial advisor.

Dean Foods has more than 50 brands under its umbrella and approximately 15,000 employees. The company canceled its third-quarter earnings call that was slated to take place on Tuesday. The company has reported losses for the last seven out of eight quarters.

Dean Foods Bankruptcy
Dean Foods has filed for Chapter 11 bankruptcy. A Dean Foods truck is parked behind a company sign April 6, 2001 at their Franklin Park, IL. corporate headquarters. In a giant milk merger pairing the two biggest U.S. dairy processors, Suiza said Thursday it is buying Dean Foods Co. for about $1.5 billion in cash and stock, taking its rival's name and moving Dean's headquarters from the Chicago suburbs to Suiza's base in Dallas. Getty Images/Tim Boyle
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