Phoenix Brands LLC, the closely held consumer products company behind Ajax cleaners and Fab laundry detergents, filed for bankruptcy protection and is putting its collection of household products on the auction block.

The Stamford, Conn., company, which filed for chapter 11 protection on Thursday in U.S. Bankruptcy Court in Wilmington, Del., is selling its assets after three years of declining sales, according to Chief Executive William Littlefield.

The Phoenix Brands CEO traced the company's struggles to Procter & Gamble Co. and others' roll out of products that combine laundry detergent, fabric softener and brighteners into single-use packets, which left Phoenix's core brands unable to compete against such "mono-dose" products.

Phoenix, which outsources nearly all of its production, also was hurt by its business model, Mr. Littlefield said in an affidavit filed with the bankruptcy court. The company, which is backed by private-equity firm Lincolnshire Management Inc., was stuck with a number of costly long-term production contracts signed before the downturn in its consumer laundry business.

The company tried to reverse course by selling assets and cutting costs. It sold its Niagara starch brand in November, and Lincolnshire pumped another $1 million into the business. But the turnaround efforts weren't enough, and Phoenix turned its attention selling off all its assets to pay its creditors.

Phoenix has lined up a trio of buyers for its laundry brands, which also include Dynamo and Fresh Start in the U.S. as well as Arctic Power and ABC in Canada, as going-concern businesses.

A.P. Deauville LLC, the maker of Power Stick deodorant and other personal care products, has agreed to buy the U.S. laundry business, which brought in $26.2 million last year, as well as the company's Final Touch fabric-softener business for $5.9 million plus the assumption of some liabilities. Lavo Inc. is seeking to purchase the Canadian laundry brands for $5 million and affiliate of Silver Swan Capital has agreed to pay $13 million for Phoenix's Rit dye, the top-selling dye in America.

All three offers will be tested at a bankruptcy-court-supervised auction. Companies selling their businesses in bankruptcy often choose a stalking-horse bidder to set a floor price on the assets in the hope of spurring a robust bidding process.

The company's senior lender, Madison Capital Funding, is providing a $23 million bankruptcy loan to keep the businesses up and running pending the going-concern sale. Just $2 million of that amount is new money, however, with the remainder rolling up the debt owed to Madison.

Phoenix Brands traces its roots back to 2003, when a group of former Unilever employees founded Winter Brands. The company purchased a number of assets—Rit dye, Final Touch fabric softener, Niagara starch spray and Sunlight detergent—from a Unilever affiliate. The following year, the company changed its name and in 2005 purchased the Colgate-Palmolive Co. laundry detergent business as well as the license to use the Ajax name for laundry products.

The laundry detergent and fabric-care products brought in $71.7 million in net revenue last year. But that hasn't been enough to turn a profit, Mr. Littlefield said. The company has assets of some $45.2 million and debts of $71.2 million, according to its chapter 11 petition.

Phoenix Brands' chapter 11 case is being handled by the law firm of Morrison Cohen LLP, and the company has hired Houlihan Lokey as its investment banker.

Judge Brendan Linehan Shannon has been assigned the case, numbered 16-11242. He has scheduled an initial hearing on the bankruptcy for Monday morning in Wilmington, Del.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

 

(END) Dow Jones Newswires

May 20, 2016 17:25 ET (21:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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