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Aryzta To Face Legal Action Over US Food Orders

Published on Apr 11 2018 2:30 PM in A-Brands tagged: US / Aryzta / McKee Foods

Aryzta To Face Legal Action Over US Food Orders

The Swiss-Irish bakery giant Aryzta is to face trial in Tennessee next year when the US-based McKee Food takes it to court over alleged losses due to unfulfilled orders.

The US snack company alleges that Aryzta’s failure to fulfil its orders properly disrupted McKee’s supply chain and that it will lose millions of dollars in profits as a result, reports the Irish Independent.

Aryzta had a manufacturing contract for a number of products for McKee Foods, however, the American firm terminated the contract last August, despite having to leave some of the former’s products temporarily unavailable to consumers.

McKee has alleged that Aryzta missed shipments, shipped incomplete or incorrect orders and shipped orders late.

Labour Shortage

Aryzta has denied direct responsibility for not being able to fulfil any orders. It has claimed that the incomplete order was due to substantial labour shortage at its Chicago production facilities resulting from a US immigration crackdown last year.

The crackdown saw a third of Aryzta’s workforce, or 800 staff, being forced out of its Cloverhill facilities.

The company’s CEO, Kevin Toland, told the Tennessee court that it will claim the “defence of impossibility of performance” as a result of the labour shortage.

The company has since sold both its Cloverhill and Cicero plant, to Hostess Brands and Bimbo Bakeries, respectively. It generated around €57 million from the sale of the plants, having paid an estimated €530 million for them in 2014.

Its most recent results showed a revenue drop of 6.3% to €1.787 billion with an organic decline of 2.2% in the six months to 31 January 2018, due to the sale of its troubled Cloverhill business which caused over €200 million in restructuring costs.

The Tennessee trial is set to take place on 16 July 2019 and is forecast to last around five days.

© 2018 Checkout – your source for the latest Irish retail news. Article by Kevin Duggan. Click subscribe to sign up for the Checkout print edition. 

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