(Bloomberg) -- Bumble Bee Foods LLC, the largest North American brand of packaged seafood, filed for bankruptcy amid criminal fines and civil lawsuits stemming from a federal price-fixing case with plans for its assets to be acquired by FCF Co. for about $925 million.

The canned-tuna purveyor sought creditor protection under Chapter 11 in Wilmington, Delaware, listing assets and liabilities of as much as $1 billion each, according to court papers. It has arranged an $80 million term loan from its current lenders and a $200 million revolving credit facility to keep operating while in bankruptcy, the documents showed.

Bumble Bee, based in San Diego and owned by London-based private equity firm Lion Capital LLC, pleaded guilty in 2017 to conspiring with Starkist Co. and Chicken of the Sea Inc. to fix and raise prices in the U.S.

The company flagged its financial distress at the time of sentencing, arguing the $81.5 million fine initially levied could push it into insolvency. The U.S. Department of Justice agreed, cutting the amount to $25 million and giving Bumble Bee an installment plan over several years that required no more than $2 million upfront.

Asset Sale

Though the canned tuna business has challenges, including disinterested younger consumers, Bumble Bee is still “an iconic brand,” said Daniel Guyder, a bankruptcy lawyer at Allen & Overy LLP in New York. The sale provides, “a real opportunity for someone to come in and put many of Bumble Bee’s historic issues in the rear-view mirror.”

A so-called “section 363 sale” in a bankruptcy, such as that planned by FCF Co., allows assets to be sold unencumbered from most existing liabilities, including certain pre-bankruptcy fines, Guyder said.

The company selling itself must still run a competitive sale process, however, to ensure that the results are fair and reflect the best value for the assets in the market, he said. FCF’s offer will thus serve as the leading bid for Bumble Bee in bankruptcy while the court supervises an auction process that is expected to close within 60-90 days, according to a release from Bumble Bee.

Bumble Bee’s Canadian affiliate, Connors Bros. Clover Leaf Seafoods Co., will also seek to reorganize under Canadian insolvency law, the company said in the statement.

Guilty Pleas

Bumble Bee’s former Chief Executive Officer Christopher Lischewski pleaded not guilty to criminal charges related to the price-fixing probe in 2018, and his trial in California federal court began Nov. 4. The hearings have featured testimony from cooperating witnesses that include executives from Bumble Bee and its competitors.

Starkist pleaded guilty to the price-fixing charges in 2018. Chicken of the Sea, owned by Thai Union Group PCL, received conditional leniency from the DOJ for its cooperation with the investigation, and didn’t face criminal charges or fines.

The case is Bumble Bee Foods LLC, 19-12504, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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--With assistance from Dawn McCarty, Jeremy Hill, Lauren Coleman-Lochner and Steven Church.

To contact the reporter on this story: Eliza Ronalds-Hannon in New York at eronaldshann@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Dawn McCarty, Allan Lopez

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