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February 11, 2021

Carla's Pasta files for Ch. 11 bankruptcy

PHOTO | Contributed (Main photo) Carla Squatrito, owner and founder of Carla's Pasta, with her two sons, Sandro and Sergio Squatrito, both vice presidents at the company.
By Sean Teehan

South Windsor fresh pasta maker Carla's Pasta this week filed for Chapter 11 bankruptcy protection, as it struggles to meet tens of millions of dollars in debt obligations amid a COVID-19 pandemic that's negatively affected its business.

In its Feb. 8 petition filed in U.S. Bankruptcy Court in Hartford, Carla's Pasta restructuring officer Sandeep Gupta said the 43-year-old family-owned business has experienced a severe downturn and lost accounts from restaurant customers, many of which have shuttered amid the pandemic. 

The company listed between 200 and 999 creditors, debt liabilities between $50 million and $100 million and total assets ranging from $10 million to $50 million. 

"The Debtors’ financial distress arises primarily from loss of revenue due to COVID-19 and the negative impact on sales to restaurants, loss of significant accounts that have not been fully replaced with additional revenue sources," the filing said.

The filing noted the company had about 140 employees as of Feb. 8. Carla's Vice President of Business Development Sandro Nicola Squatrito told HBJ in April that the company furloughed about 100 workers at the time as it performed equipment maintenance. 

Squatrito noted in April that the business was taking a hit from the pandemic as “significantly more than half" of its customers are restaurants. Squatrito did not return a call or email Wednesday requesting comment.

Both Carla’s Pasta and its wholly-owned subsidiary Suri Realty LLC are named in the bankruptcy filing. Suri is a limited liability company Carla’s set up to control its real estate assets in South Windsor, including facilities at 50 Talbot Lane and 280 Nutmeg Road.

Much of the company’s debt stems from $62 million in loans the company took out in 2017 to help finance a major expansion, including a 70,000-square-foot food preparation plant addition to its facility at 50 Talbot Lane. As of Oct. 1, there was about $37.7 million remaining on the loans, court records show.

PHOTO | Contributed
Carla's Pasta's South Windsor facility at 50 Talbot Lane.

The bankruptcy filing also references a contract dispute lawsuit and foreclosure action that’s been filed by Massachusetts-based Dennis Group Engineering LLC against Carla’s Pasta.
Dennis Group was responsible for designing and building out the addition and said it hasn’t been paid on time and is owed $13.3 million, court records show.

State records show Carla’s Pasta is facing at least six different civil lawsuits in state court, most from creditors who say they are owed money.

Last fall, as the pandemic and restrictions on indoor dining continued ravaging the food service industry, Carla's embarked on a cost-savings initiative that saved about $5 million in annual costs, the filing said. But that wasn't enough to pull the business out of a financial hole.

"Unfortunately, the impact of COVID-19 and mounting collection actions, coupled with the state court litigation by the Dennis Group, impaired the Debtors’ ability to reorganize outside of these Chapter 11 Cases," the filing said.

Over the years Carla’s Pasta built a sales and support network spanning throughout the United States, Mexico, and Canada and has sold to many of the largest foodservice and grocery retailers in North America along with a number of leading restaurant chains. Its largest revenue segment is in foodservice, which provides a wide variety of meal components at various price points to major foodservice customers for use in education, healthcare facilities, and restaurant chains. 

In addition, Carla’s Pasta offers three different tiers of private label pastas, as well as pesto, sauces, and appetizers.

In 2018 the company celebrated its 40th anniversary and HBJ honored it as a Family Business Awards winner. 
 
Carla Squatrito is the well-known founder of the company and her sons, Sandro and Sergio Squatrito are top executives. 
 
Carla’s husband, Dominic J. Squatrito, a well-known former federal judge, died in January at age 82.

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