Atkins Files Chapter 11 35106

Atkins Files Chapter 11

RONKONKOMA, N.Y.AtkinsNutritionals Inc., the company founded by the late Robert Atkins, M.D., tosupplement 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, butthe company reported it had reached an agreement with most of its lenders togive them equity in exchange for reduced debt. Court documents showed thecompany 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 companyduring its bankruptcy period, Atkins said it has received $25 million indebtor-in-possession financing arranged by financial firm UBS.

Atkins, which posted a $341 million loss in fiscal 2004, hasbeen suffering decreased sales it blamed on waning popularity of the low carbdiet craze that it had helped to launch. A recent NPD Group survey showed only3.6 percent of American adults followed a low carb diet in February 2005, asopposed 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/vegetableintake.

The company, which at one time sold a wide array of low carbproducts, said it intends to file a reorganization plan with the bankruptcycourt that would further its efforts to refocus its business on nutrition barsand shakes.