Chapter 7 - Solutions for a Financial Crisis » Chapter 7 Bankruptcy

As many businesses, small and large alike, file for bankruptcy, they are forced to plan cost cutting measures to save what little money they have left in hopes to reorganize their debt.

Many of these businesses attempt to cut frivolous expenses. But if that does not impact the budget they unfortunately give their employees the boot.

Take for example NutraCea, a Phoenix based company that makes rice bran into food product. They filed for Chapter 11 bankruptcy last November in the Arizona Bankruptcy Court.

Now, Reuters reports the company says it needs to cut 17 percent of its U.S. workforce to keep their operations alive. They say that cutting the workforce will save NutraCea over $1 million – a significant sum for a company in still under bankruptcy protection.

As of right now NutraCea has about 68 full time employees in the U.S. that could be affected by the layoffs.

When the company originally filed for bankruptcy they planned to restructure their operations and sell non-essential assets to reduce their $18.9 million in debt.

The company’s assets were listed as $83.7 million in the bankruptcy papers.

The Associated Press reported that they sold their interest in a company that planned to build wheat mills in Indonesia.

Also Wells Fargo Bank agreed to provide debtor in possession or DIP financing of $6.75 million to NutraCea. DIP financing would help the company run its daily operations while reorganizing.

Prior to NutraCea’s Bankruptcy petition the company moved the headquarters to Sacramento, California. Now they are looking to cut that operation space by 75 percent.

The company also has operations in Louisiana, Montana and Brazil. Reuters reported that none of the company’s subsidiaries are included in the bankruptcy filing.

CEO and chairman John Short said in a statement that “We deeply regret having to make this difficult but necessary decision as we continue to restructure the company. Our goal continues to be to reduce costs and increase profitable sales in an effort to enhance our liquidity and become cash flow positive in the second half of 2010.”

He continued to thank the employees for their time and service with the company.

NutraCea said the company now will focus on its “core business” such as the production of rice bran, rice bran oil, baby cereal and nutritional supplements.