Iconic Ice Cream Co. Closing Plant And Laying Off 127 Workers After Bankruptcy Filing

If you’re a fan of good-quality ice cream, you’re probably familiar with Oberweis Dairy. If not, this company is famous for producing some of the best ice cream in the country. Sadly, they may soon be out of business.

They recently filed a Chapter 11 bankruptcy in the Northern District of Illinois. The reason? They’ve been having some money trouble over the years and owe over 20 creditors $24 million.

Laying Off 127 Workers

The sad news that the beloved brand might be closing shocked a lot of dedicated customers. But the employees were definitely hit the hardest. Alongside Oberweis Dairy’s bankruptcy news, it also announced that it will lay off 127 workers.

They informed the state that this massive layoff would start at the family-owned North Aurora dairy. Also, employees at the establishment have less than two months to prepare as it begins on June 11.

A Statement From Oberweis’s President

The president of Oberweis Dairy, Adam Kraber, gave a statement on the company’s current state. He said that they hoped to have an asset purchase agreement with a buyer before filing for bankruptcy.

This purchase would have specified the termination and even get more employers rehired. Sadly, it didn’t happen. So, the company’s lawyer advised Oberweis to file a notice to the state to cover the layoffs.

You Need A Notice For Mass Layoff

Their lawyer explained that Oberweis needed to tell the public that they were firing a lot of people. Kraber recalled: “We have been told by counsel a notice is required if it’s reasonably foreseeable that jobs may be lost, even if there is a possibility or probability that jobs will not be lost.”

What if they failed to issue this warning? Kraber answers: “Not issuing the notice prior to filing would likely cause an adverse impact on general unsecured creditors.”

What Went Wrong With Oberweis Dairy?

Oberweis Dairy filed for Chapter 11 bankruptcy protection after failing to secure a buyer. This person or entity was supposed to rescue the company from financial distress as they’ve been losing money over the years.

The bankruptcy filings show that Oberweis owes over $24 million. This was because they took $4 million in unsecured loans and then $14 million in secured loans. Since they couldn’t pay back creditors they had to file for bankruptcy protection.

Oberweis Dairy Was An Industry Giant

While it’s now in an unfortunate situation, Oberweis was a behemoth in the past. They had 40 stores in Chicago, Michigan, Indiana, and St.Louis, and were famous for their bottled milk.

Besides their stores, they also did home delivery and grocery distribution services. The company currently has its North Aurora dairy factory that’s currently almost 30 years old. But Oberweis got so big that they had to outsource some of their manufacturing.

They Had Over 1500 Employees

The bankruptcy filing also showed that Oberweis had 1,149 employees. However, around 933 of them work part-time in the dairy store. So that equates to 213 full-time Oberweis employees.

Surprisingly the company’s president explained that the staff often goes up during the summer months. Essentially, employee numbers can rise as high as 1500 to help handle peak demands for ice cream during the hot weather.

Oberweis Is Paying Workers Their Outstanding Wages

Now that the company is under legal protection, the first step is to compensate the workers for their time. So, Oberweis filed a motion to pay $340,000 in outstanding wages to its workers.

It’s worth noting that that payroll averaged about $891,000 every two weeks. That’s from January through March 2024.

Why Did The Business Crumble?

Very few people expected Oberweis Dairy to go out of business. It started in 1915 and withstood the test of time with millions in revenue every year. It even earned $95 million in 2023. So what was the problem?

It’s because they failed to keep up with customers’ new needs as there’s been a higher demand for dairy alternatives like plant-based milk. The bankruptcy filing also blames the declining business on “improvident” capital expenditures.

Oberweis Dairy Out Of Family Hands

The company was founded by Peter Oberweis and was passed down along four generations. It’s currently in the hands of Jim Oberweis, but not for long.

The financial issues and declining demand had made it harder to run the business. So, Jim had no choice but to let Oberweis go, almost ending the family’s line of ownership. Luckily, they filed for bankruptcy.

Jim Oberweis Was Also A U.S. Congressman

It’s worth noting that Jim Oberweis is also a United States senator and congressman. He won a seat in Illinois in 2013 for the 25th district.

He also served there as a republican spokesperson for the Labor and Commerce Committee. Jim eventually left the state Senate in 2021 to pursue other fulfilling endeavors.

What Is A Chapter 11 Bankruptcy Filing?

This means it will outline all its business affairs to the court. That includes its operations, debts, and assets, and all will be under the Court’s supervision.

The thing about this type of bankruptcy is that it doesn’t require Oberweis to liquidate entirely. Instead, they will continue their operations while working on a way to repay their creditors.

So Will Oberweis Remain Family-owned?

It’s hard to say. Nothing in the Chapter 11 bankruptcy filing requires Jim Oberweis to give up ownership of the property. The document protects the company while it slowly fixes its finances.

But there’s also the possibility that Jim Oberweis will sell the company as he previously tried to do. However, there’s no way of knowing for sure because he hasn’t commented on the situation.

They Have Time To Fix Things

Oberweis has served Americans for over 100 years with the best dairy products and has a large following. They can capitalize on these active customers while rebuilding their brand.