Harvest Sherwood Food Distributors, the largest independent wholesale food distributor in the United States with $4 billion in annual revenue, filed for Chapter 11 bankruptcy protection on May 5, 2025, in the United States Bankruptcy Court for the Northern District of Texas. The filing occurred nearly a month after the Detroit-based company completed a shutdown that eliminated 1,500 jobs across multiple states.

The collapse resulted from the loss of largest customer Sprouts Farmers Market, a SEAFAX credit rating downgrade, and liquidity crisis that rendered strategic alternatives unviable. Twelve affiliated entities, including SFD Transportation, also filed Chapter 11 petitions, with estimated liabilities between $323.5 million and $558.5 million.

Business Operations and Market Position

Harvest Sherwood was formed in 2017 through the merger of Sherwood Food Distributors (founded 1969 in Detroit) and Harvest Food Distributors (founded 1989 in California). The merger created a nationwide protein and perishable food distribution network serving over 3,500 customers through 14 distribution centers across 13 states.

The company shipped over 20 million pounds of food weekly through a fleet of 250+ trucks, distributing beef, pork, poultry, seafood, deli items, and bakery products to retailers and foodservice operators. The company served as a critical link between over 650 suppliers and nearly 3,500 customers, maintaining supplier relationships averaging 25+ years.

Major suppliers included Trident Seafoods, Chicken of the Sea, Ocean Beauty Seafoods, Pacific Seafoods, and AquaStar. The company maintained an industrial footprint of approximately 1.3 million square feet across 15 properties in 10 states.

Events Leading to Bankruptcy and Shutdown

The SEAFAX downgrade had an immediate impact on liquidity, with vendors placing the company on hold or demanding cash terms. After initially withholding $55 million in payments, Sprouts ultimately withheld $42 million following the failed settlement.

Layoffs were distributed across multiple states: 273 employees in Maple Heights, Ohio, 255 roles in Michigan, 130 roles in South Florida, and 96 roles in Portland, Oregon. Working with Hilco Global, the company recovered $140 million on inventory with a face value cost of $154 million, achieving a 91% recovery rate.

Chapter 11 Filing and Capital Structure

The Harvest Sherwood bankruptcy filing occurred on May 5, 2025, when Harvest Sherwood Food Distributors and twelve affiliated entities filed voluntary Chapter 11 petitions in the Northern District of Texas, nearly a month after ceasing operations. The company reported estimated liabilities between $323.5 million and $558.5 million.

Major creditors include Burford Capital ($35 million), National Beef Packaging ($15.5 million), and Tyson Foods ($13 million). The company secured a $105 million DIP facility consisting of $25.9 million in new money financing and a $79.1 million roll-up of existing ABL obligations, with $5 million accessible upon interim approval.

During the winddown, the company sold five distribution centers in Denver, Salt Lake City, Los Angeles, Kansas City, and Miami to strategic purchasers who assumed certain obligations and purchased inventory. An ad hoc committee of approximately 25 unsecured creditors holding $27 million in claims formed to engage with the company regarding the winddown process.

Litigation Assets and Strategic Implications

Harvest Sherwood's Chapter 11 strategy centers on maximizing value from litigation assets while completing liquidation. On February 24, 2025, the company filed suit against Sprouts in Delaware Superior Court seeking $42 million in withheld payments, alleging breach of contract and fraud. Following the Chapter 11 filing, a substantially similar adversary proceeding was filed in bankruptcy court on May 8, 2025, with the Delaware action stayed.

The company holds antitrust and price-fixing claims against pork, chicken, and beef producers, asserting over $1.1 billion in damages excluding treble damages, with trials scheduled from the second half of 2025 through 2026. However, Burford Capital, which provided $35 million in operating capital, asserted on April 9, 2025, that a Material Adverse Effect had occurred and claimed control over antitrust litigation assets, which the company disputes. The company also filed suit against a former employee alleging fraud with estimated losses exceeding several million dollars.

Stakeholder Impact and Industry Implications

The Harvest Sherwood bankruptcy collapse highlights consolidation pressures in food distribution and vulnerability of distributors dependent on major retail customers pursuing self-distribution strategies. Ripple effects across the company's 650+ supplier network and 3,500 customers demonstrate supply chain disruption risks. The case demonstrates the rapid liquidity impact of credit rating downgrades and customer concentration risk in low-margin distribution businesses. Check out our blog for ongoing coverage of similar restructuring cases showing industry-wide consolidation trends.