🍴New Chapter 11 Bankruptcy Filing - Danimer Scientific Inc.🍴
Don't put all your eggs in one customer -- particularly a QSR chain for f*ck's sake.
We told you you didn’t need a crystal ball to see where this one was going.
On March 18, 2025, two days after we last published on the name, Georgia-based Danimer Scientific, Inc. ($DNMWQ) and 9 affiliates (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Walrath).
Because it’s fresh on your collective minds (and there’s that link ⬆️ there), we won’t belabor you with excessive business background. In short, the debtors manufacture and (try to) sell bioplastic replacements for traditional, petroleum-based plastics. The debtors tout them as more environmentally friendly, but scientists are skeptical.
In terms of updates we haven’t previously covered, CEO Stephen Croskrey peaced out in October ‘24. No doubt he saw the writing on the wall and decided ‘24 was the perfect year to “retire.” Crestview Advisors, L.L.C.’s Richard Hendrix gobbled up his spot as chairman of the board, and the debtors named former-Hexion Inc. VP Richard Altice as interim CEO in mid-October ‘24. Mr. Altice still holds that spot today, so the debtors will benefit from his dual expertise in plastics and bankrupt sh*tcos. Which is good because … well, we’ll let AlixPartners, LLP’s (“Alix”) Frank Pometti, the debtors’ first day declarant, have the honors:
“For many months, the Debtors have been fighting to preserve their operations as a going concern consistent with their efforts to maximize value for all of their stakeholders. However, the recent developments with a large potential customer effectively torpedoed the Debtors' continued efforts to raise additional capital to continue as a going concern and forced a process pivot.”
Any particular word in there stand out to y’all? For us it was “potential,” so we read on.
“In addition to growing existing customer relationships, the Company had been pursuing a significant near-term business opportunity. For multiple years, the Company has been cultivating a relationship with a new and significant customer (the ‘Major New Customer’) to purchase the Company's product to supply an internationally-recognized quick-service restaurant (the ‘Major QSR’) with bioplastic cutlery for all of its North American locations. Like all of the Company's customer relationships, this relationship involved multiple rounds of testing, product development, and extensive negotiations.
Testing Danimer's products for use at the Major QSR first began over three years ago.
The initial testing phase lasted 18 months, initial converter trials lasted 10 months, and trials with the final round of converters lasted for 8 months. The Company received letters of intent dated in February and October of 2024 evidencing an intent to purchase an estimated annual 23 million pounds of finished PHA-based resins for use in cutlery and over-wrap films for the cutlery, and the Company worked to solidify this relationship for several months leading up to the Petition Date.”
Hold up, are you allowed to use “near-term” and “multiple years” in back-to-back sentences for this business? We’re talking about negotiating the sale of plastic forks, which shouldn’t require a damn-near geological time scale. In any event, while the debtors pursued this mysterious new customer, they sought bridge financing to limp on, enlisting Vinson & Elkins LLP (George Howard, David Meyer, Trevor Spears, Sara Zoglman) and Centerview Partners LLC (“Centerview”) in October ‘24 and Alix the following month to pitch in. We told you the debtors were successful in our last update, raising, as of the petition date, ~$15.2mm from two existing lenders (Jefferies Capital Services, LLC and an affiliate of The Baupost Group) and one capital structure newbie (Riva Ridge Capital Management-affiliate Riva Ridge Master Fund) (collectively, the “ad hoc group”). However, even if we hadn’t, it’s right there on row 2 of the debtors’ top 30 GUC list.
Yooooooooooooo, Centerview!!! This is why fees ALWAYS. Go. In. The. Funds. Flow!
Before we move on and for good measure, here’s the rest of the cap stack.*