An Elmsford wholesaler of protein bars is seeking bankruptcy protection, citing partnership conflicts both corporate and marital.
Raw Indulgence Ltd. filed a Chapter 11 reorganization petition on May 8 in U.S. Bankruptcy Court, White Plains, declaring $708,413 in assets and nearly $3.9 million in liabilities.
During divorce proceedings with her ex-husband and business partner, CEO Alice Benedetto stated in a court filing, “little to no sales activity occurred, which caused the debtor to lose considerable market share.”
“Additionally, three to four new competitors were able to enter the market in a category that the debtor once thrived in and pioneered.”
Last year, the company booked income of $5,432,725, according to the petition. Through early May it had booked $1,477,591.
Raw Indulgence was founded in 2004 to sell snacks created by Benedetto. Initially, according to court records, it made brownies with fruits, nuts, seeds and maple syrup and sold them to health food stores. As the snacks became more popular, they were sold in stores like Wegmans and Whole Foods. Then Benedetto created a vegan protein bar that was sold by independent chain stores, Amazon and on its own website.
But as her marriage foundered, so did the business.
Benedetto and her husband had been able to work together and make business decisions, according to a 2021 lawsuit she filed seeking to dissolve the corporation. But after he filed for divorce in 2017 they were unable to agree on critical business decisions.
In 2019, a consultant was appointed to help resolve their stalemate, but still, according to the 2021 lawsuit, they “remained at constant impasse on all the necessary decisions relating to the future of Raw’s business.”
In 2020 they worked out a settlement requiring her husband to buy Benedetto’s half of Raw Indulgence for $3.95 million. That deal fell through, and eventually she retained control of the business.
Raw turned to the merchant cash advance (MCA) market, alternative lenders that quickly provide short-term loans but typically charge steep interest rates and fees.
The company developed a sales plan to generate more monthly income to cover the payments, according to Benedetto. “Unfortunately, the cash flow was not sufficient to pay all of these MCAs,” so Raw petitioned for reorganization.
The list of unsecured creditors includes six MCA lenders with claims totaling $683,783. Each claim is characterized as disputed.
Raw also shows a $2 million obligation to the U.S. Small Business Administration for an Economic Injury Disaster Loan.
The company intends to use the bankruptcy process to restructure its debt and resolve various claims with vendors and lenders, Benedetto said. It will support a reorganization plan with funds from ongoing business and new financing.
Raw is represented by Manhattan attorney Robert L. Rattet.
