On July 8, US Tobacco Cooperative Inc. (USTC) took the extraordinary step of filing for Chapter 11 protection in US federal court for the sole purpose of meeting short-term contractual obligations to member-growers during crop season 2021.
“This filing provides us the best way possible to meet our short-term obligations and plan for the future,” said Oscar J. House, c.e.o. and president, USTC. “In no way does this action reflect on the health of the organization and its ability to continue operations well into the future. In fact, this action is in response to the uncertainty presented by the ongoing class action litigation brought against us in 2005. Rest assured that our obligations to our member-growers, employees, suppliers, and customers have always been and will continue to be our highest priority and concern.”
As a result of this proactive filing, USTC intends to satisfy obligations to its 550+ member-growers and 200+ employees, and suppliers and customers will continue to receive the exceptional service and products the organization is known for across the globe. This filing will allow USTC to reorganize and restructure to honor commitments to stakeholders and ensure the organization’s sustainable future.
Tobacco Asia had a short talk with Mark Schueller, director of marketing, USTC about this development.
Tobacco Asia (TA): How will this affect USTC’s customers?
Mark Schueller (USTC): We appreciate the relationship we have with our customers and consider it a privilege to provide them with high-quality tobacco products via our consumer products subsidiaries. While we undergo this process, our manufacturing, distribution, and industry-leading consumer products will remain. Orders for our brands and products will be taken, fulfilled, and delivered. Customers can continue counting on our top-quality tobacco brands and products, and expect exceptional service from our team.
TA: Is there anything further USTC’s customers/suppliers need to do or know about this process?
USTC: [The] executive team is confident this filing, along with the restructure of credit facilities, will position [USTC] for success. US Tobacco is strong and the infrastructure is healthy. This move is simply an opportunity to re-set, satisfy 2021 crop contracts, and position the cooperative and its member-growers for success in the future.
TA: How will USTC be different?
USTC: The goal of the Chapter 11 filing is to create a financial plan that will enable [USTC] to satisfy its member-grower contracts, pay employees, and restructure credit facilities so the organization can remain open and prosper.
US Tobacco Cooperative Inc. (USTC) is a grower-owned marketing cooperative located in Raleigh, North Carolina. The cooperative processes US flue-cured tobacco grown by its 550+ member-growers in Florida, Georgia, South Carolina, North Carolina, and Virginia. Member-grower tobacco is processed and sold as raw materials to cigarette manufacturers worldwide. Subsidiaries of USTC include US Flue-Cured Tobacco Growers (USFC), Premier Manufacturing, Franchise Wholesale (d/b/a Wildhorse Distributing), Big South Distribution, and King Maker Marketing, Inc. USTC, through its subsidiaries also produces consumer products for the US market under brand names of Wildhorse, 1839, Manitou, Shield, 1st Class, Ultra Buy, and Traffic.