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The basics:

• FreshRealm to cut 637 jobs at its Linden facility by July
• Company filed for Chapter 11 bankruptcy to stabilize finances, operations
• Misfits Market set to take over Blue Apron production under proposed deal
• Listeria-linked recall and loss of Walmart business hit revenue, operations

After filing for Chapter 11 bankruptcy, FreshRealm plans to lay off 637 workers in New Jersey.

In a notice with the state Department of Labor & Workforce Development, the fresh food manufacturing partner said the downsizing will occur by the end of July at its facility in Linden.

In addition to New Jersey, FreshRealm expects to let go of 161 workers in Texas and 228 employees in California.

Founded in 2013, the Texas-based company partners with retailers and meal-kit brands to produce and distribute ready-to-eat products at scale. About 75% of its revenue stems from serving as exclusive maker of Wonder-owned Blue Apron meal kits, according to FreshRealm.

Blue Apron business

The company began operating in New Jersey three years ago after acquiring the site from Blue Apron as part of an expansion effort, Food Engineering reported at the time.

In a petition filed April 27 in U.S. Bankruptcy Court for the District of New Jersey, the company said it is entering Chapter 11 to strengthen finances, support business stability and maintain operations.

As part of this process, FreshRealm reached a deal that would see another supplier take over its agreement to make meal kits for Blue Apron, the filing said.

If the settlement is approved, grocery delivery box company Misfits Market will handle Blue Apron production and fulfillment for FreshRealm, according to the filing. In exchange, FreshRealm would get $42 million in cash considerations from Blue Apron and other monetary obligations.

FreshMarket also plans to pursue a sale of its remaining business through a court-supervised process.

To support continued operations during the Chapter 11 process, FreshRealm has secured a commitment for $63 million in debtor-in-possession financing from its existing lenders.

Looking toward FreshRealm’s ‘next phase’

The bankruptcy comes less than a year after a listeria outbreak linked to FreshRealm’s prepackaged chicken fettucine alfredo meals sold at Walmart and Kroger led to a nationwide recall.

Federal health officials said the outbreak sickened at least 17 people in multiple states and was associated with three deaths and one fetal loss. The contamination prompted a major recall and federal investigation, as well as impacted the company’s operations and key retail relationships.

According to MarketWatch, the fallout prompted Walmart to end its relationship with FreshRealm. The retailer accounted for about 20% of FreshRealm’s revenue, the outlet reported.

FreshRealm noted that a “significant ingredient supply disruption” last year “materially impacted the company’s operations and financial performance.”

In a statement, FreshRealm founder and Chief Executive Officer Michael Lippold said, “We have built a business that serves an important need in the fresh food and meal space, and we remain focused on continuing to serve our customers while supporting our employees, suppliers, and partners through this transition.”

“Our agreement with Blue Apron, and the actions we are taking, create a clearer path forward for the business. We continue to believe in the long-term potential of the platform following the Blue Apron transition,” he went on.

Lippold added, “We are proud of the platform we have built and the role we play in helping our partners bring fresh meals to more people in more places. I want to thank our employees, customers, suppliers, and partners for their continued support as we move through this process and work toward the next phase for FreshRealm.”