Federal Judges Order Buyer Of Bankrupt Dean Foods To Sell Off Assets

Earlier this year, we blogged about the bankruptcy of Dean Foods, and the unique legal situation the buyer of its assets was in. Now we’ve got a bit of an update to share, and it is going to impact every dairy product sold under the Dean name in the state of Wisconsin. 

Dean Bankruptcy Sends Shockwaves Through The Dairy Industry 

Last November, Dean Foods filed for Chapter 11 bankruptcy. At the time, it was the largest milk processor in the country and the owner of significant assets here in Wisconsin. While there were concerns that the bankruptcy would cause a chain reaction of bankruptcies in America’s Dairyland, so far it does not seem like that is the case. (However, there are many things stressing the dairy industry at this time, and the Dean bankruptcy could be a contributing factor.)

The DOJ Steps In 

It has taken longer than normal to wrap up the Dean bankruptcy because the federal Department of Justice (DOJ) and the Wisconsin Attorney General filed a civil antitrust lawsuit against the Dairy Farmers of America Inc. (DFA) after it purchased some of Dean’s assets out of bankruptcy. The government argued that DFA would have too much power over the milk market if it were allowed to purchase all of the Dean Food assets it desired. 

What’s happening now? 

The dispute has just now been resolved. The federal judge handling the case approved a final judgment requiring DFA to divest two plants it had purchased, one in De Pere, Wisconsin, and one in Harvard, Illinois (also known as the Chemung plant) to another buyer within thirty days.  

DFA is also required to divest the intellectual property associated with the De Pere plant, including the exclusive right to using the “Dean’s” name in Wisconsin, Illinois, Indiana, and the Upper Peninsula of Michigan, and licenses for the “TruMoo” and “DairyPure” brand names nationwide.

Wisconsin Attorney General Josh Kaul agreed with the court’s decision, stating “this judgment will save critical Wisconsin jobs. Maintaining strong competition in Wisconsin’s dairy market is important for our state’s economy, especially as the economy continues to be impacted by the effects of the global pandemic.”

This will also have a significant impact on consumers in Wisconsin, although it is unlikely many will notice a difference in who is producing items under the Dean name. 

A Milwaukee Bankruptcy Firm You Can Trust

As we said in our previous blog, the government’s interference in this bankruptcy is not unprecedented, but it is somewhat unusual. Most businesses going through bankruptcy do not need to worry about the government taking such a strong interest in who buys their assets. Typically, high dollar cases and ones where the sale of certain assets could reduce competition or create a monopoly are the only ones closely examined by the DOJ or the Wisconsin AG. 

If you own or operate a distressed business, and are concerned filing for bankruptcy will not be a smooth process, we may be able to help. Hanson & Payne is a business-minded bankruptcy firm with deep roots in the Milwaukee area. Business owners and commercial lenders from across the state rely on us to counsel them and guide them through the bankruptcy process. We would be honored to assist you during your time of need.