Tessemae’s Files for Chapter 11, Seeks to End ‘Distracting Litigation’

Wrestling with debt and litigation, down to a small fraction of its workers, its two factories shuttered, condiment company Tessemae’s announced today it will voluntarily file for Chapter 11 bankruptcy in order to restructure the company.

Tessemae’s filed a voluntary petition for relief in the U.S. Bankruptcy Court for the District of Maryland (Baltimore). The company announced its filing in a press release today.

“Our goal, from the beginning, was to bring a suite of products into the marketplace to those who believe there is a better way,” Gregory Vetter, CEO of Tessemae’s, said in the press release. “This decisive action, will no doubt, enable us to do just that and, in turn, emerge as a stronger, more competitive business.”

Investors in the company included Sagamore Ventures, the early-stage investment arm of Plank Industries, owned by Under Armour founder Kevin Plank, along with Baltimore-based War Horse, owned by his brother and former Under Armour executive Scott Plank.

The release notes that filing will allow the company to ultimately continue on effectively and efficiently not only by restructuring debts but also stopping “other legacy issues” such as ongoing litigation, which dates back over a decade. According to an article by the Baltimore Business Journal, the company currently has 25 open cases in federal and state courts as well as numerous closed cases. Over the years producers, suppliers and lenders have sought restitution from the condiment brand, which was founded in 2009 by the three Vetter brothers.

Chapter 11 allows for a “stay” of many kinds of open litigation, particularly dealing with company debt, while the company restructures. Today’s press release specifically points to litigation “brought by a former lender for the Company” as a core obstacle.

“Management believes the former lender’s claim is meritless and has filed a counterclaim against the lender, but the existence of the litigation and the associated costs have been an impediment to growth in recent years,” the release said. “The filing is designed to bolster the company’s financial position, create operational flexibility, and drive greater efficiency.”

Last September The BBJ reported that Tessemae’s had laid off 35 of its 80 employees, adding in today’s article that the company’s roster has now dwindled to just six employees. Vetter told the BBJ today that the corporation had obtained a loan as part of the bankruptcy process, which will allow it to fill 100% of its orders. Despite opening a 28,000 square foot facility in 2020, which joined a 36,000 square-foot Baltimore-based production facility, the company has since shuttered both locations, working instead with an East Coast copacker.

Tessemae’s first gained notoriety for being one of the first of a new wave of entrants into the refrigerated salad dressing space. That, in turn, led to refrigerated condiments such as barbecue sauce and ketchup, a food service business, ready-to-eat salad kits, single-serve packages and a shelf stable line of condiments and salad dressings. As of 2020, the brand’s shelf stable items were sold in 8,000 stores while the refrigerated products were in 9,000, with many retailers, including Whole Foods, Walmart and Target, opting to sell both.

The company’s website currently features a whittled down list of 16 products, the vast majority of which are the brand’s flagship refrigerated and shelf-stable dressings. None of the products are available to purchase via the brand’s own ecommerce storefront.

Despite today’s news, the Vetters have chosen to focus on the positive.

“This comprehensive restructuring will enable us to thrive for years to come and enable us to recognize our full potential,” Gregory Vetter said in a press release. “The future is bright.”