Atkins Files Chapter 11

RONKONKOMA, N.Y.--Atkins Nutritionals Inc., the company founded by the late Robert Atkins, M.D., to supplement his low carb diet plan, filed for bankruptcy protection in U.S. Bankruptcy Court in New York. A hearing was scheduled for Monday, Aug. 1, but the company reported it had reached an agreement with most of its lenders to give them equity in exchange for reduced debt. Court documents showed the company owes various lenders more than $300 million and listed company assets at $301 million. While at least five lenders refused to offer credit to the company during its bankruptcy period, Atkins said it has received $25 million in debtor-in-possession financing arranged by financial firm UBS.

Atkins, which posted a $341 million loss in fiscal 2004, has been suffering decreased sales it blamed on waning popularity of the low carb diet craze that it had helped to launch. A recent NPD Group survey showed only 3.6 percent of American adults followed a low carb diet in February 2005, as opposed to 9.1 percent who followed such a program the previous February. Critics of the diet condemned its focus on fatty foods and low fruit/vegetable intake.

The company, which at one time sold a wide array of low carb products, said it intends to file a reorganization plan with the bankruptcy court that would further its efforts to refocus its business on nutrition bars and shakes.