A hearing on the prearranged, Chapter 11 filing by Atkins Nutritionals Inc. was scheduled for Monday in U.S. Bankruptcy Court, spokesman Richard Rothstein said Sunday.
The privately held company, founded in 1989 by Dr. Atkins, said it had reached an agreement with the majority of its lenders to give them equity in exchange for lowered debt.
The company, which sells Atkins-brand nutrition bars, shakes and candy as well as offering low-carb diet information, has been hurt by waning popularity of its namesake approach, which focuses on eliminating carbohydrates such as bread and pasta to shed weight.
The diet became one of the most popular in U.S. history, spawning a virtual cottage industry of low-carb regimens — but also drew criticism from experts for its focus on fatty foods and low fruit and vegetable consumption.
The Atkins company owes $300 million in outstanding principal and interest, Rothstein said. The company said it had received $25 million in financing to operate during the bankruptcy proceedings, which it said would not affect day-to-day operations.
President and CEO Mark S. Rodriguez said the company has in the past year "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 it leaves bankruptcy, the Ronkonkoma, N.Y.-based company will focus on its nutrition bars and shakes, Rodriguez said in a statement.
A recent survey by the NPD Group, an independent marketing information company, found that the number of American adults on any low-carb diet peaked at 9.1 percent last February and dropped to 3.6 percent by mid-November.
Private equity firm Parthenon Capital LLC acquired a majority stake in Atkins, in October 2003. Goldman Sachs Capital Partners owns a smaller stake in the company, as does the estate of Dr. Atkins, who died in 2003 from injuries he suffered in a fall.