If you have a Facebook account occasionally people post what they eat, which is a good thing, and one of the ways they were cooking it was many people bought an Instant Pot. The pot works well and the food is tasty, and people were creative in ways they were using the device as the devoted ones are called Potheads. The problem for the company called Instant Brands, during the pandemic sales jumped and Instant Pot became a best seller. After you have one, do you need anymore? If you have a kettle to borrow water, how often do you buy a new one?

In an article by Jesus Jimenez of the New York Times News Service, Instant Brands the maker of Instant Pot, Pyrex, Snapware, and CorningWare filed for Chapter 11 bankruptcy. The company went the Chapter 11 route rather than outright bankruptcy because it can access $132.5 million in funding and will restructure its business. Essentially the creditors will take less or equity in the company.

Ben Gadbois, President and CEO of Instant Brands said tightening of credit terms and higher interest rates impacted our liquidity levels and made our capital structure unsustainable.

Barbara Kahn, a marketing professor at Wharton School of Business, not the official reason for the restructuring is debt burden. It is common for companies dealing with a lull in sales to have debt burdens.

S&P Global, the credit rating and analytics corporation, downgraded Instant Brands rating because of lower consumer spending in the discretionary categories. Instant Brands sales were down 21.9% in the 1st quarter relative to the same quarter last year.

Linking to dividend paying stocks, debt can be a wonderful aspect to individual and corporate balance sheets, but if it is too much something will suffer. The issue for investors is when does debt become too much? Sometimes when sales increase dramatically, sometimes when the company buys another company at a high price and commodity prices turn downwards, there are those times as an investor you want to lighten your holdings or take profits and find alternatives as you monitor your investments.

There are more questions than answers, till the next time – to raising questions.