Atkins files for bankruptcy shield

01/08/05 Atkins Nutritionals has filed for a bankruptcy protection chapter 11 in the US as the low carb dieting fad fades away. A spokesman for Atkins said a hearing on its filing was due to take place today in a US bankruptcy court. Chapter 11 gives a company time to reorganise itself by giving it protection from its creditors.

The company listed assets of $301 million and liabilities of $325 million in papers filed with the U.S. Bankruptcy Court in New York. Atkins owes UBS Securities LLC and other lenders roughly $301 million under a 2003 loan, according to the papers filed yesterday.

Atkins Nutritionals took the step after people wanting to lose weight increasingly turned their backs on a diet that focused on cutting out foods such as bread and pasta in favour of protein-rich meat and cheese.

But the Atkins diet horrified many in the medical profession because it emphasised the consumption of fatty foods at the expense of fruit and vegetables.

Demand also dropped after Dr Atkins died in 2003 and rival multinational firms started promoting similar products, such as low-carb bars of Kit-Kat and Rolo from Swiss food giant Nestle.

Foodmakers including Unilever and Kraft Foods Inc. were hurt in 2003 and 2004 as U.S. consumers began to monitor their weight by limiting their sugar intake, as is advocated by Atkins' diet plan. The companies retaliated by introducing their own line of low-sugar foods, such as Unilever's Carb Options line and Kraft's South Beach diet meals, and the competition hurt Atkins' company.

“Mainstream companies such as Unilever, Kraft, and General Mills broke into the controlled-carbohydrate market in 2004 with well-funded, aggressive product launches,'' Rebecca Roof, Atkins' chief restructuring officer, said in court papers. As a result, Roof said, sales in 2004 were ``dramatically less than forecast.''