Phoenix-based NutraCea (NTRZ), a producer of stabilized rice bran and other baby cereals, had filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The petition was filed in the U.S. Bankruptcy Court for the District of Arizona on Nov 10.
The world leader in stabilized rice bran nutrient research and technology plans to restructure its operations with government aid. Pursuant to the bankruptcy code, the company will reshuffle its operations, trim overhead costs and dispose of non-core assets, while focusing on its core business of stabilized rice bran, rice bran oil, nutraceuticals and baby cereals. None of the company’s subsidiaries were party to the bankruptcy filing.
Concurrent with the bankruptcy filing, the company applied for $6.8 million of loan from Wells Fargo Bank, a division of Wells Fargo & Company (WFC). This loan, along with the cash generated from operations, will help the company to make wages payment and return to its normal day-to-day operations. NutraCea already has a loan of $3.6 million from Wells Fargo Bank.
On Oct 23, NutraCea filed restated financial statements for 2006, 2007 and the first three quarters of 2008. The company reported a net loss of $64.5 million for fiscal 2008, compared to a net loss of $18.0 million for fiscal 2007. The company has experienced recurring losses and negative cash flows from operations. NutraCea is lagging in its payments to vendors and has defaulted on several agreements due to nonpayment.
Expenses have been reduced wherever possible. In the past, the company has turned to the equity markets for additional liquidity. However, this is not a likely source of funds at this point of time due to the company’s financial position and the state of the equity markets.
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