Troubled national cheese brand files for Chapter 11 bankruptcy | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

National food processing companies have faced challenges over the last two years, battling rising labor and product costs driven by inflation and tariffs, as well as increased interest rates on debt obligations.

Many companies have needed to reevaluate their operations, restructure their businesses, and reduce expenses. In some cases, companies are forced to file for bankruptcy to reorganize their businesses.

Among the most significant food companies to face financial distress this year was Del Monte Foods, which filed for Chapter 11 bankruptcy on July 1, with a restructuring support agreement supported by a group of its prepetition lenders to seek a going-concern sale of all of its assets.

In some cases, unfortunate circumstances outside of the common economic challenges are a detriment to a company’s financial health.

The parent company of the Don Francisco, Tio Francisco, and Rizo Bros cheese and cream brands filed for Chapter 11 bankruptcy, facing millions of dollars in lawsuits and claims as a result of a 2023 listeria outbreak affecting its products.

Rizo-Lopez Foods files for Chapter 11 bankruptcy protection.

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Rizo-Lopez Foods files for bankruptcy protection

Rizo-Lopez Foods Inc. filed its petition in the U.S. Bankruptcy Court for the Eastern District of California in Sacramento on Sept. 15, listing $10 million to $50 million in assets and $50 million to $100 million in liabilities.

The debtor’s founders Edwin Rizo and Ivan Rizo have committed to provide up to $3.7 million in debtor-in-possession financing to fund the company’s Chapter 11 case.

The Modesto, Calif.-based debtor’s largest unsecured creditors include Sargento Foods Inc., owed over $58.7 million in disputed recall claims; Castle Importing, owed over $4.7 million in disputed recall claims; and Pacific Cheese-Hayward, owed over $3.7 million in disputed recall claims.

It also owes Resers Fine Foods Inc. over $3.6 million in disputed recall claims and Amy’s Kitchen Inc. over $2.9 million in disputed recall claims, according to its petition..

Rizo-Lopez’s largest unsecured creditors:

Sargento Foods Inc, owed over $58.7 million in unliquidated disputed recall claims.
Castle Importing, owed over $4.7 million in unliquidated disputed recall claims.
Pacific Cheese-Hayward, owed over $3.7 million in unliquidated disputed recall claims.
Resers Fine Foods Inc. over $3.6 million in unliquidated disputed recall claims.
Amy’s Kitchen Inc. over $2.9 million in disputed recall claims.

Rizo-Lopez voluntarily recalled all of its Cotija cheese after a 2023 Hawaii listeria outbreak.

Rizo-Lopez recalls 1,200 pounds of cheese

The cheese company was advised by the U.S. Food and Drug Administration and the Centers for Disease Control in February 2024 that one of its products had been linked to a strain of listeria. It immediately recalled 1,200 pounds of Cotija cheese under its Tio Francisco and Rizo Bros brands and shut down operations.

The debtor cooperated with federal authorities from February 2024 through May 19, 2025, when it received approval from the FDA to resume plant operations. The company spent the next three months further decontaminating the plant and preparing to reopen in August.

More bankruptcy:

Due to the recall, the debtor wrote off $6.7 million in accounts receivable with customers and finished goods inventory in excess of $4 million, according to a declaration from the company’s CEO Edwin Rizo.

Rizo estimated that the company’s exposure to potential liability may exceed its insurance coverage. Several lawsuits have been filed alleging injury or damages, and it’s too early for the debtor to determine the total amount of potential exposure.

Rizo-Lopez faces several lawsuits and claims

The company faces a lawsuit filed by Sargento seeking as much as $59 million in damages and another by Resers and Castle, seeking about $8.4 million in damages, according to court papers.

The debtor also faces damage claims by Latitude 36 (over $646,000 in damages), Amy’s Kitchen (about $3 million in damages), and Pacific Cheese (over $3.7 million in claims.)

Rizo-Lopez also owes over $10.2 million in secured claims to Wells Fargo and Wells Fargo Equipment Finance, as well as other vendor and customer claims.

Company lawsuits against Rizo-Lopez:

Sargento Foods Inc.
Resers Fine Foods
Castle Importing

All litigation is subject to an automatic stay while the debtor’s bankruptcy case proceeds.

“In my opinion, debtor will suffer immediate and irreparable harm if the relief requested in the application is not granted since it will be unable to use cash collateral, pay employees, pay for utilities, pay for insurance and have sufficient operating funds utilizing the proposed debtor in possession financing to keep producing and selling cheeses and cheese products and maintain customer base,” Edwin Rizo said in the declaration.

Before the company recalled its products and halted operations, it employed 320 workers and produced 40 million pounds of cheese and 10 million pounds of creams annually.