[Baltimore Sun] Baltimore-based Tessemae’s plans to sell salad dressing company for $4.75 million through bankruptcy
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Tessemae’s, a Baltimore-based maker of organic salad dressing and condiments sold at dozens of national and regional retailers, plans to sell to a New Jersey owner of specialty food brands for $4.5 million through a bankruptcy procedure.
The U.S. Bankruptcy Court in Baltimore must approve the sales agreement between the company, founded 15 years ago by three Annapolis brothers, and Panos Brands. Tessemae’s filed for Chapter 11 reorganization Feb. 1 to restructure debts and stop what it called costly and distracting litigation by a former lender. The filing at the time listed liabilities in a range of $10 million to $50 million.
“We got to the point where we just needed to go back to our mission, which is making salad dressing,” Gregory Vetter, Tessemae’s CEO, said in an interview after filing for Chapter 11 protection.
After working to stabilize the business and boost orders, the company determined it could best preserve the brand by selling its assets, according to a Dec. 21 court filing. Vetter could not be reached immediately Thursday.
Panos, based in Rochelle Park, New Jersey, manages a portfolio of brands such as Andrew & Everett cheese, KA-ME Asian food products, Walden Farms calorie-free foods and Amore Italian cooking pastes.
A Panos representative also could not be reached Thursday. Panos, which offered $4.5 million, was selected Dec. 18 as the highest or best bidder of two competitors at a bankruptcy auction. The Panos bid excluded Tessemae’s $800,000 in accounts receivable.
If the sale to Panos falls through, the company would be sold to McDermott Group, made up of principals of Tesse DIP Fund I LLC. McDermott was chosen as backup bidder with a $4.75 million offer including accounts receivable,
Vetter and his two brothers started the company in Annapolis in 2009 based on their mother’s all-natural salad dressing recipe. The products debuted in a single Whole Foods store, and sales quickly expanded to national grocers, retailers and hotel chains.
The brand got a boost in 2015 when Under Armour founder Kevin Plank and his brother Scott Plank invested $5 million in the company, which at the time had $25 million in sales. By 2018, Tessemae’s products could be found on the shelves of about 6,000 U.S. stores. At its peak in 2021, Tessemae’s was producing 36 bottles of dressing per minute, which were sold in 12,500 locations nationwide.
But demand outpaced supply as the company quickly expanded, and Tessemae’s faced worker shortages and Cost increases for raw materials during the pandemic. The struggles led to layoffs in 2021 as well as to product price hikes and cuts to promotional spending and some of its less profitable customers.
The dressing maker shifted to a contract manufacturing model instead of running its own plants and has operated with only a handful of remote workers. While in bankruptcy, the company shifted once again to a “turnkey” model, in which the co-manufacturer buys raw materials and Tessemae’s buys finished products.
The company also has faced litigation over the years.
During the two years leading to bankruptcy, Tessemae’s was mired in litigation in Baltimore County after Democracy Capital Corp. sought more than $13.8 million related to a loan with an original principal amount of $3 million, a court filing said.
In 2018, a handful of suppliers filed lawsuits against the company, including an Elkridge-based contract manufacturer seeking more than $150,000 in damages.
A hearing on the proposed sale is scheduled for Jan. 18.
This story might be updated.
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