Welcome to the 135th Pari Passu Newsletter.

Two weeks ago, we explored the case of BurgerFi, a fast-casual chain whose aggressive acquisition strategy and premium positioning left it unable to cater to shifting consumer habits. Today, we will dive into another brand whose downfall also stemmed a failure to adapt to shifting consumer demands: Tupperware.

Tupperware became a household name in postwar America, revolutionizing food storage through direct-selling and iconic marketing. However, its heavy reliance on a traditional sales model left the company vulnerable as consumer behaviors shifted toward digital and omnichannel retail. Today, we’re going to dive into Tupperware’s bankruptcy and use it as a case study to understand how business model rigidity, liquidity strain, and creditor dynamics led to its downfall. 

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Tupperware Founding

During World War II, plastics were primarily used for military applications such as producing gas masks and various wartime equipment. After the war, the plastics industry faced excess production capacity from manufacturing military goods. Earl Tupper took advantage of this surplus and took plastic to the consumer goods market. Traditional polyethylene plastics were hard, smelly, and unappealing to everyday consumers, so Tupper experimented until he developed a cleaner, translucent, and more versatile material; Tupper Plastics was thus founded in 1938. His breakthrough came not just from the material itself, but from creating an innovative sealing mechanism coined the “Tupper seal.” Borrowing the concept from paint can lids, Tupper designed an airtight lid that made a burping sound when it was fully sealed. This feature was central to the 1946 debut of the Wonder Bowl and a line of companion storage containers that marked the beginning of the Tupperware brand.

Tupperware products gained traction during a time when American families were seeking affordable, practical solutions for food storage in a growing consumer economy. With refrigerators becoming more common, people needed better ways to preserve leftovers and reduce waste. Tupperware met this demand with its functional, attractively designed containers, which were soon produced in vibrant colors inspired by natural elements. The brand eventually opened a storefront on Fifth Avenue, transforming what was once a utilitarian item into a household staple.

In 1947, Brownie Wise, a divorced single mother in Detroit, discovered Tupperware and quickly recognized its potential after mastering the unique sealing mechanism. Drawing on her previous experiences in marketing and home-based product demonstrations, Wise introduced a party-based sales strategy. She launched gatherings called “Polly-T” parties (later known as Tupperware Parties), where hosts and trained saleswomen would demonstrate Tupperware products in a fun, hands-on environment. Her famous demonstration involved filling a Wonder Bowl with liquid, “burping” the lid (sealing it tightly), and tossing it to show off the spill-proof seal. 

These events resonated with postwar women seeking both social interaction and extra income without disrupting their domestic responsibilities. Wise’s exceptional direct-sales marketing strategy caught the attention of Tupper, who appointed her as head of marketing vice president of Tupperware, positions that were rarely held by women at the time. Tupperware’s direct-selling strategy was executed through Tupperware parties and other in-person gatherings, where independent sellers demonstrated products and sold them directly to consumers. Tupperware subsequently exited retail channels in 1951 and shifted entirely to its direct-selling model, which remained the company’s sole marketing strategy until very recently [1]. To clarify, Tupperware did not pursue digital marketing at all for the majority of the company’s lifetime, only appearing for the first time in physical locations with its debut on Target shelves in 2022 [6]. 

Wise built a strong female salesforce and further boosted morale and performance through “Jubilees,” celebratory events that fostered community and rewarded top sellers. Wise believed that “if we build the people, they’ll build the business;” her strategy transformed Tupperware into a thriving direct sales empire and made her the first woman featured on the cover of BusinessWeek [1]. 

In 1958, Tupper sold the company to Rexall Drugs for $9mm and moved to Costa Rica. Rexall expanded the company, notably entering international markets in Europe and South America, before selling the company to Kraft in 1980. Using the same playbook of multilevel marketing and international expansion, Kraft continued to grow the company. Unsatisfied with Tupperware’s performance, however, Kraft spun it out via IPO in 1996. Through the 1980s, Tupperware’s patents had expired, allowing competitors to create competing products that cut into sales. Additionally, with women entering the workforce in record numbers throughout the second half of the 20th century, Tupperware’s multilevel marketing strategy focused on stay-at-home mothers had begun to lose relevance. These headwinds proved to be early indicators of greater issues Tupperware has faced over the past few years [2].

Business Model

Tupperware’s direct-selling business model operated under a sales force consisting of independent consultants. These consultants, primarily women, did not work as traditional employees but operated as independent contractors. Their role was to sell Tupperware products directly to consumers, often through Tupperware parties where they demonstrated products and took orders. Consultants earned commissions on their own sales and could earn additional income by recruiting others, creating a tiered structure that resembled what we know today as multilevel marketing. This model allowed Tupperware to scale its global reach without maintaining a large retail footprint, with the company expanding to 3.1mm consultants and eighty countries by 2015. Tupperware later expanded into adjacent sectors through acquisitions, including a beauty and personal care brand in Mexico [1]. 

The company conducted business in four main regions: Europe, Asia Pacific, North America, and South America. 

While we will focus on pre-distress financials in this section, the graph above gives a comprehensive view of the company’s performance over time, which will be relevant later. Most of the company’s revenue comes from foreign sales, with North America sales only accounting for around 25% of revenue in the past decade prior to the company’s financial struggles. Revenue peaked in 2013 at $2.7bn after steady growth from 2009. From 2013 to 2017, the company’s growth stagnated with an average revenue of $2.4bn, $1.6bn gross profit, $330mm operating income, and $220mm net income. We did not factor in net income for 2017 for our five year average as there was a particularly large net loss of negative $265mm in 2017 due to a $375mm non-cash income tax charge resulting from the enactment of the US Tax Cuts and jobs Act of 2017 (educed Tupperware’s U.S. corporate tax rate and triggered a one-time tax on previously untaxed foreign earnings) [7]. Tupperware’s market cap peaked at around $5bn in 2013, and decreased to around $3bn by the end of 2017 [8]. 

We also want to note that, while Tupperware’s performance began to steadily decline starting in 2018, the company’s financial performance overall had been relatively stable since 2009 [8]. This is important to recognize as Tupperware relied almost exclusively on its direct-selling model in this period. Despite the broader shift toward digital channels, Tupperware’s relative financial stability indicates that the company’s core business performance, and thus its legacy direct-selling strategy, remained relatively effective for nearly a decade. Even as the pandemic forced many stores to rely exclusively on direct-to-consumer (DTC) sales, Tupperware stayed committed to its direct-selling strategies by taking Tupperware parties online, with e-commerce sales only making up around 4% of total revenue in 2020 [5]. 

2020 Refinancing Senior Secured Notes

As shown in Figure 2 and discussed in our review of Tupperware’s early-to-mid 2010s performance, the company’s previously stable financial trajectory began to erode after 2018. While the overall reusable storage container market grew from $1.35bn in 2014 to $1.44bn in 2019 [11], revenues for Tupperware decreased for three years in a row from $2.3bn in 2017 to $1.6bn in 2019 [9]. The decline in revenue was largely driven by a drop in Tupperware parties, as consumers increasingly had less time or interest in attending in-person gatherings, and competitors like Rubbermaid and Glad adopting omnichannel sales channels. Despite the prevalent shift toward digital sales, Tupperware held steadfast in their direct-selling strategy even as other direct sellers began adopting digital strategies. Pampered Chef (another direct-seller of kitchen supplies), for example, reported digital sales accounting for over half of revenues in 2019, up from 10% in 2014, after successfully integrating digital channels into its business model. Additionally, the company faced leadership instability, with no permanent CEO following the departure of Rick Goings after more than two decades as CEO and the brief 18-month tenure of his successor, Patricia Stitzel [11].

While Tupperware’s sales strategy was beginning to show signs of faltering, the company’s bonds still traded around par as creditors believed the company could meet its financial obligations given its leverage profile: a $272mm Five-Year Revolving Credit Agreement and a $600mm 4.75% Fixed Rate Senior Secured Notes due 2021 [9].

The COVID pandemic in 2020 only accelerated early signs of failure in Tupperware’s business model. The shutdown of social interaction due to the pandemic severely impacted Tupperware’s direct sales strategy. Q1 2020 revenue fell an additional 23% on a quarterly year-over-year basis, with the number of direct sellers falling to around 490,000 globally, reflecting a 15% year-over-year decline. Given this impact to the business, combined with the disclosure of an investigation into financial reporting errors by Tupperware’s Mexican beauty business, Moody’s cut Tupperware’s bonds to single-B in February 2020. Tupperware’s single-B rating placed it in the speculative / junk rating, below investment grade. By May 2020, the bonds had traded down to a low of thirty cents on the dollar due to concerns about Tupperware’s ability to repay the soon-maturing notes in 2021. At this point, market cap was also fell to $130mm [8]. With no insight into the future of the pandemic and a cash burn of nearly $50mm in Q1 2020, the situation looked dire for Tupperware [12].

First, in February 2020, creditors agreed to amend the credit docs governing the Revolving Credit Agreement to increase the leverage ratio threshold from 3.75x to 5.75x. In Q4 2019, the company had total debt of $875mm and adjusted EBITDA of $240mm, giving a leverage ratio of 3.6 [25]. The increase in leverage ratio threshold was done as a preventative measure to ensure Tupperware did not default, as its leverage ratio at the end of 2019 was nearing the limits provided by the debt docs [9]. Over the next near, the leverage ratio would gradually return back to the original 3.75x:

Second, the company had $460mm in lines of unused credit across all global operations, with $380mm of this capacity under its Revolving Credit Agreement [9]. By March 2020, Tupperware had $175mm in cash [8]; the company proactively drew $225mm to increase liquidity in response to the pandemic and in preparation for an anticipated debt repurchase (buying back its own outstanding debt, often at a discount, to reduce debt obligations) [12]. Working with its advisors, Moelis & Co. and Kirkland & Ellis, the company determined that under its Credit Agreement, it could commit $175mm of these proceeds to extinguish the Senior Secured Notes through two cash tender offers, buying back a total of $220mm in bond face value at a discount for $165mm [15]. 

Following these transactions, Tupperware was left with $380mm in outstanding 2021 notes, which it sought to refinance. In December 2020, the company was able to finalize two new term loan facilities totaling $275mm. Using these proceeds, along with some cash they had on hand, the company was able to retire all outstanding notes, leaving Tupperware with no obligations until late 2023 [13]. At the end of the refinancing, the company’s cap stack primarily consisted of the new $275mm term loan and $420mm credit agreement for a total of around $700mm in total obligations at the end of 2020 [15]. 

After the company’s successful refinancing, Tupperware also saw an increase, albeit small, in sales for the first time in four years after the pandemic accelerated at-home cooking and a subsequent increase in demand for food storage solutions. Tupperware’s sales reached $1.6bn in 2021, a slight increase from $1.55bn in 2020. Shares surged from pandemic lows of $2 to $37 and market cap bouncing back from $80mm in March 2020 to $1.8bn in January 2021 [8]. This sharp increase in stock price was likely driven not only by the modest revenue growth, but also by investors’ belief that imminent bankruptcy risk had been alleviated following the refinancing.

2023 Debt Restructuring Agreement 

Despite Tupperware’s successful refinancing of its Senior Secured Notes in 2020, the company’s relief was short-lived as it continued to face challenges throughout 2022. There were a few factors that contributed to a revenue decrease from $1.6bn in 2021 to $1.3bn in 2022. First, recall that Tupperware derived most of its revenues from abroad; in 2022, continued lockdowns in China and the Ukraine conflict prevented Tupperware from recognizing growth in these regions. Second, the prices for resin, a key material to the company’s products, increased in all segments. Finally, opportunities for gig workers were also increasing, making it difficult for Tupperware to find and keep direct salesmen. Tupperware tried to increase product prices and enhance salesforce initiatives in response to these macro headwinds. However, given the amount of competition in the industry and the availability of substitutes, these significant price hikes across the product portfolio had the unintended effect of further decreasing sales. As a result of the $300mm decrease in revenue, gross profits fell from $1.1bn in 2021 to $830mm in 2022, and net income fell from $16mm to negative $230mm [16]. The company’s free cash flow in Q3 2022 was negative $92mm [24].

At the end of 2022, Tupperware also faced a likely breach of its financial covenants under its Credit Agreement, raising substantial doubt about its ability to continue as a going concern. At the time, Tupperware had no access to additional borrowing under its revolver and was in default on certain covenants. Furthermore, the company began experiencing liquidity constraints. From Q4 2021 to Q4 2022, Tupperware had a cash burn rate of $31mm per quarter. The company ended Q4 2021 with $246mm in cash, meaning it was left with only $114mm at the end of 2022 [8]. There were a few major effects that were triggered by these liquidity constraints [16]: 

First, Tupperware no longer expected to generate enough taxable income to use some of its deferred tax assets (DTA), so the company wrote down $180mm of DTAs [16]. DTAs are accounting assets that represent the value of future tax deductions a company can use to offset taxable income, but they must be written down if it becomes unlikely the company will earn enough profits to use them.

Second, since the company could no longer promise to keep foreign profits permanently reinvested, it had to account for taxes that would be owed if those funds were repatriated to the U.S., which increased deferred tax liabilities by $12mm [16]. When a U.S. multinational earns profits through its foreign subsidiaries, it can declare that those profits are "permanently reinvested" abroad. If it does, it does not have to recognize U.S. taxes on those foreign earnings immediately. However, if the company can no longer make that promise, then it must record additional tax liabilities for potential U.S. tax and withholding tax costs associated with repatriating that cash. In Tupperware's case, because of its liquidity crisis, it planned to repatriate cash to meet U.S. debt obligations, so it lifted its permanent reinvestment assertion and recognized a new tax liability.

Third, and most importantly, some loans that were previously classified as long-term intercompany receivables were reclassified as short-term after Tupperware lifted its assertion of permanent reinvestment of foreign earnings [16]. This signaled that the company likely had plans to repatriate (bring cash held abroad back to the company’s home country) offshore cash to address mounting U.S. debt obligations, meaning that previously untapped foreign cash reserves would now be used to meet near-term liabilities. This shift not only increased the company’s exposure to foreign exchange volatility (since short-term balances are more sensitive to currency fluctuations on the income statement) but also signaled liquidity stress, as it indicated the company may need to unwind internal cash pools earlier than expected. 

While these changes were all non-cash, they highlighted increasing financial stress. This became evident as the company failed to refinance its notes due in July 2025 due to lenders’ loss of confidence, as evidenced by senior loans trading down to 52 cents on the dollar [17]. 

At the end of 2022, here’s what Tupperware’s capital structure primarily consisted of the following: 

While the company was facing imminent covenant breaches, no access to additional liquidity, and the need to refinance nearly all of its $700mm outstanding debt (all of which was due in 2023), Tupperware shares plunged nearly 50% in a single day after it announced a delay in filing its 2022 Annual Report due to an internal accounting review [16] [18]. Anticipating continued sales declines across key markets, the company retained its advisors again (this time also including Alvarez and Marsal) to negotiate with creditors and execute a turnaround strategy. 

Negotiations with creditors culminated in a Debt Restructuring Agreement announced in August 2023. Put simply, a debt restructuring agreement is a negotiated deal between a borrower and its lenders to modify the terms of existing debt (like repayment or covenants) to avoid default; debt restructuring agreements are a form of forbearance. The agreement allowed the company to access to up to $21 million under the revolver, reduced the amount payable for principal and cash interest in the following twelve months, and extended the maturities of the term loans (USD Term A Loans and revolver extended to July 2025, and USD C Loans and EUR Term D Loans extended to July 2027). Additionally, Tupperware was required to issue warrants representing up to 4.99% of its fully diluted shares. Of that, 2.99% became immediately exercisable, while the remaining 2% would vest upon achieving certain repayment milestones [16]. To clarify, the company did not receive any proceeds from this issuance; instead, the ad hoc group received these warrants as part of their compensation for amending the Credit Agreement.

Below is what Tupperware’s capital structure looked like following the out-of-court debt restructuring: 

Events Leading to Chapter 11 

In an attempt to keep the company alive after its successful debt restructuring in early 2023, Tupperware began exploring other sales channels to try to boost revenue. Tupperware launched its first Amazon storefront in June 2022 and started sales through Target in October 2022. Although Tupperware has seen some growth in its online and retail sales, this increase has not been enough to make up for the sharp decline in its traditional direct selling business. Revenue decreased an average of $13.5mm per quarter for the four quarters leading up to, and including, Q3 2023 [8]. By the end of Q3 2023, Tupperware had around $120mm cash on hand, quarterly free cash flow of negative $14mm, and total debt of $780mm [19]. 

Forbearance Agreement and Amendments

In February 2024, the company missed an interest payment. Tupperware subsequently entered a forbearance agreement with its lenders, in which the lenders agreed to not to enforce remedies for the default through June 2024, provided the company met certain conditions (including advancing a second sale process and preparing for a potential Chapter 11 filing). With the support of Moelis, Tupperware then  initiated a formal outreach to potential buyers or investors to explore strategic alternatives, including a partial or full company sale. Out of around 84 contacted parties, 28 signed NDAs and 7 engaged in deeper discussions. Five non-binding offers were secured by April 2024, and three proposed full-company acquisitions. Only one bidder submitted a qualifying offer that addressed the company’s entire capital structure, but that negotiation fell through at the end of June 2024 [1]. 

As a result of this failed marketing process, Tupperware and its lenders signed two amendments to the original forbearance agreement. The First Forbearance Amendment, signed in June 2024, extended the deadline for Tupperware to reach a definitive solution to address its capital structure needs to July 2024. The Second Forbearance Amendment, signed in July 2024, further extended the forbearance period to August 2024 and relaxed restrictions on term loan trading and confidentiality [1]. The purpose of the second amendment was likely to facilitate broader engagement with potential investors or buyers by enabling more flexible debt trading and information sharing, thus increasing the chances of securing a viable restructuring or sale transaction. 

The Ad Hoc Group

After restrictions on term loan trading were lifted, the majority of Tupperware’s first-lien debt (inclusive of all the debt obligations in Figure 5), which was held by a group of commercial banks led by Wells Fargo Bank NA, was acquired at extremely steep discounts (3–6 cents on the dollar) by Stonehill Institutional Partners LP, Alden Global Capital LLC, and Bank of America NA. These three lenders formed the Ad Hoc Group, positioning themselves as the dominant creditor bloc [20]. To facilitate a going-concern sale, the ad hoc group extended emergency funding via a 14% $8mm bridge loan (due September 2024) in August 2024 to Tupperware with a 25% original issue discount (OID) [1]. As a quick reminder, OID is the difference between a bond or loan’s face value and its lower issue price. The lender pays less upfront than the loan’s face value but is repaid the full face amount at maturity, meaning the discount effectively compensates the lender like additional interest that is embedded in the repayment. 

There were two elements of this bridge loan that became contentious with an outside lender, Wexford Capital, who was not in the ad hoc group. First, inventory securing the original term loan was re-collateralized to back the new bridge loan. This meant that all existing claims on the inventory held by non-ad hoc group lenders were released. Second, the ad hoc group also negotiated an exclusivity provision, which is a clause that gives one party the exclusive right to negotiate or close a deal for a set period, preventing the seller from engaging with other bidders. Taken together, these actions effectively stripped Wexford of its collateral rights and blocked it from participating in the sale process. 

As of the September 2024 filing date, the company’s capital structure is as follows: 

Chapter 11 and Sale to Credit Agreement Lenders

After two failed out-of-court attempts at managing its capital structure, it became clear that Tupperware could no longer sustain its debt load without an in court solution. However, the ad hoc group strongly opposed any in-court process, as it would dilute their recoveries by requiring a fair allocation of value across all Credit Agreement lenders; recall that the ad hoc group owned a majority, but not all, of the facilities under the Credit Agreement (inclusive of all debt instruments listed in Figure 6, excluding the bridge facility). 

In an attempt to avoid an in-court filing, the ad hoc group made a proposal to acquire key assets, including the Tupperware brand name, through an out-of-court strict foreclosure in late August 2024 (before Tupperware officially filed for Chapter 11). An out-of-court strict foreclosure is a process where a secured lender takes ownership of collateral without needing court approval, after the borrower defaults on a loan. For this process to proceed legally, the lender must consent. The benefits of an out-of-court strict foreclosure is that it’s much faster and cheaper than an asset sale through bankruptcy; however, it can be controversial because it does not consider, or require the consent of, other creditors. The ad hoc group was pushing for this out-of-court solution because it believed that the Chapter 11 plan outlined by the company was unrealistic and would result in a Chapter 7 liquidation; the ad hoc group also cited over $67mm in restructuring fees with no successful outcome for the company, arguing that an out-of-court solution could achieve the same sale result more efficiently [20]. 

However, in early September 2024, Tupperware rejected the ad hoc group’s out-of-court proposal.  The company was against this option and heavily preferred an in-court sales process to mitigate the potential (likely) litigation costs that would result from giving the ad hoc group preferential treatment. In response, the ad hoc group filed two motions in the same month: a motion to dismiss or convert the case (end the bankruptcy entirely or shift it from Chapter 11 reorganization to Chapter 7 liquidation) and a motion to object the use of cash collateral for the Plan in September 2024. 

By November 2024, the court had overruled the Ad Hoc Group’s objection and approved Tupperware’s use of cash collateral [21]. Following the court’s approval of Tupperware’s use of cash collateral in November 2024, the company was quickly acquired by Party Products Holdings LLC, referred to in filings as “NewCo,” in November 2024. NewCo was the designee of the Credit Agreement lenders (of which Stonehill, Alden Global Capital, and Bank of America held the majority), meaning that NewCo acted as the buyer on behalf of the lenders. The sale was executed with a credit bid of $54mm, $15.5mm in cash, and cash repayment of the bridge loan (around $8mm) minus any cash Tupperware had at the sale closing [22]. We discussed credit bids extensively in our BurgerFi deep dive, but as a quick review, credit bids allow secured lenders to use the value of their outstanding debt as currency to acquire a debtor’s assets rather than paying cash. 

In April 2025, Tupperware was granted an extension until July 2025 to re-file its plan of reorganization. Until then, we do not know for certain the allowed claim amount for the general unsecured claims, but we do know that general unsecured claims (excluding deficiency claims) will receive their pro rata share of the of the Liquidating Trust (remaining proceeds after the asset sale), totaling around $1mm. Should the proceeds from the liquidating trust exceed $1mm, the remaining 90% would be allocated on a pro rata basis to the term loan lenders, with the remaining 10% being distributed on a pro rata basis to the general unsecured creditors [1]. 

Tupperware’s bankruptcy ultimately reflects the dangers of business model rigidity and delayed strategic adaptation. While the company enjoyed decades of success through its direct-selling model, it failed to evolve quickly enough in response to major shifts in consumer behavior, digital commerce, and competitive pressure. Even after multiple refinancing and restructuring efforts, liquidity pressures and covenant defaults forced Tupperware into Chapter 11. As Tupperware emerges under new ownership in 2025, its future will depend on whether the brand can successfully reinvent itself in a modern, digital consumer environment, a stark contrast to the party-based model that once made it a household name.

[1], [2], [3], [4], [5], [6], [7], [8], [9], [10], [11], [12], [13], [14], [15], [16], [17], [18], [19], [20], [21], [22], [23], [24], [25], [26]  

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