Atkins Diet Turns Low Carbs Into Big Debts

Atkins Nutritionals, Inc., the company founded in 1989 by cardiologist Dr. Robert Atkins, is over $300 million in debt and has filed for bankruptcy. Despite the fact that the diet has become one of the most popular in the history of the United States, the Atkins craze began a steady decline in popularity in recent months due to harsh criticism worldwide from experts in nutrition. A hearing on the Chapter 11 bankruptcy filing was held last week in U.S. Bankruptcy Court, according to spokesman Richard Rothstein.

By way of explanation for the handful of Americans who may not have heard of the Atkins diet, the eating regimen focuses on the elimination of carbohydrates such as rice, bread, and pasta, in order to shed weight quickly. Because of the widespread popularity of the diet, the landscape of the American food market changed dramatically, with increasing numbers of low-carb products cramming grocery store shelves, from low-carb breakfast cereal to low-carb juices and muffins. Packaging labels on foods like green beans and beef jerky, which are low in carbs anyway, suddenly had labels that shouted out "low in carbs!" to consumers who didn’t know any better anyway. Dieters everywhere eagerly latched onto the diet, since they could suddenly slather as much butter as they wanted to on the biggest steak in the meat market. It didn’t matter that they couldn’t have a baked potato with it—they were happy that they could eat as much as they wanted to without having to cut back, as long as what they ate was low in carbohydrates.

Nutritional experts didn’t take long to cry foul, because of the diet’s focus on fatty foods and its advice to avoid consumption of fruits and vegetables. Although the criticism didn’t seem to affect the diet’s popularity at first, people gradually began to wonder whether the criticism was well placed, particularly after the death of Dr. Robert Atkins himself after a bad fall put him into a coma. Interestingly, the news reports of his accident also included mention of the fact that Atkins had suffered a cardiac arrest himself the previous year, news that might have given some of his low-carb followers pause. As the popularity of the diet began to slip, breadmakers and bakers began to cheer as their businesses picked back up. Although sales had dropped during the high point of the low-carb craze, businesses starting swinging upward again as dieters’ attitudes began to shift.

The privately held company, based in Ronkonkoma, NY, has reached an agreement with most of its lenders to give them equity in exchange for lowered amounts of debt. The company has received $25 million in financing to operate during the bankruptcy proceedings, which is has said would not affect the day-to-day operations of the business. The private equity firm Parthenon Capital LLC acquired a majority stake in Atkins nearly two years ago. Goldman Sachs Capital Partners owns a smaller stake in the company, as does the estate of Robert Atkins. Mark S. Rodriguez, President and CEO of Atkins Nutritionals, Inc., says that in the past year the company has "adjusted our organization to accommodate a smaller business" and will promote its brands "more broadly for consumers who are concerned about heath and wellness." After the bankruptcy proceedings are concluded, the company will shift its focus to nutrition bars and shakes rather than low-carb products, Rodriguez said in a statement.