Private-equity-backed snack maker Hearthside Food Solutions has filed for bankruptcy in the US after facing difficulties in refinancing its debt.

The frozen burritos and cracker maker, implicated in a child labour scandal last year, submitted voluntary petitions for prearranged Chapter 11 cases in the US Bankruptcy Court for the Southern District of Texas on Friday (22 November).

The bankruptcy move comes after the contract manufacturer reached a restructuring support agreement (RSA) with its shareholders, aiming to “right size” its balance sheet, the company said in a statement.

The restructuring will allow the company to reduce its debt by more than $1.9bn and secure $200m in new equity capital upon the exit from Chapter 11.

Hearthside also stated that the RSA will provide the company with “substantial” equity capital and position it for long-term growth.

The company is also seeking court approval for $300m in debtor-in-possession (DIP) financing to ensure uninterrupted operations during the Chapter 11 proceedings.

Of this amount, $150m is set to come from existing lenders.

On receipt of the court approval, Hearthside expects to emerge from bankruptcy by the first quarter of next year.

The company's Interbake Canada operations are not included in the filing.

The Downers Grove, Illinois-based company was acquired by PE firms Charlesbank Capital Partners and Partners Group Holding in 2018.

It operates a network of 28 production plants, employing approximately 12,100 workers.

Hearthside CEO Darlene Nicosia said: “With a sustainable capital structure and a significant infusion of new capital to fund our long-term plan, we will be well-equipped to enhance our leadership in the food manufacturing industry as we drive continued innovation and growth.

“We have taken decisive action across our company to put our past challenges behind us, and are encouraged by the improvement we have already seen in our employee engagement, organisational culture, and ability to deliver best-in-class, quality products and services that our customers can depend on.”

The latest development comes after Hearthside announced the closure of a baked bars factory in Nashville, Tennessee, in May, affecting 229 jobs.

A report from the New York Times last year alleged that the snack maker employed migrant children at its Grand Rapids, Michigan, facility. In response, the company stated that it was "appalled" by the allegations.