Oberweis, a century-old North Aurora dairy with a recent history of Republican political aspirations by its owner, is seeking Chapter 11 bankruptcy protection.
The family-owned dairy, which has dozens of ice cream stores and shelf space in grocery stores across the Midwest, owes more than $4 million to its 20 largest unsecured creditors, according to the bankruptcy filing Friday in Chicago.
Bartlett-based Italian food service company Greco & Sons is listed as the largest unsecured creditor at more than $721,000 owed, according to the filing. Oberweis Dairy also owes the Cook County treasurer more than $173,000.
The company also owes about $14 million in secured bank debt, according to a declaration filed Monday from Oberweis Dairy President Adam Kraber.
Kraber said the company “faced increasing financial challenges” in recent years, due to consumer demand for dairy alternatives gaining traction and “improvident” capital expenditures that left it unable to weather declining sales.
Missteps included attempting to enter Asian markets that did not result in any business, outsourcing organic milk and sweet drink manufacturing and transitioning to amber-colored bottles in the grocery retail segment, which customers did not like, according to the filing.
After millions of dollars in cost cuts failed to stem the operating losses, owners Jim and Julie Oberweis “made the sad but necessary decision” to sell the business last year, according to the filing. When that failed, Oberweis Dairy filed for bankruptcy protection.
Started in 1915 when Peter Oberweis, an Aurora dairy farmer, began selling extra milk to his neighbors out of a horse-drawn wagon, the enterprise became Oberweis Dairy in 1930, according to the company’s origin story posted on its website. His grandson, Jim Oberweis, bought the business in 1986 and put it on a fast track to regional expansion — before pursuing a career in Republican politics.
Oberweis Dairy opened its first ice cream store in 1951, and has since grown to more than 40 locations in the Chicago area, northwest Indiana, Michigan and St. Louis. Oberweis dairy products, including old school bottled milk, are also available in grocery stores throughout the Midwest.
In 1997, it opened a new production facility and headquarters in North Aurora. Joe Oberweis, the youngest son of Jim Oberweis, became the fourth generation leader of the family-owned business in 2007.
During his tenure, Joe Oberweis launched companion restaurants, That Burger Joint and Woodgrain Pizzeria, and expanded the home delivery segment to include Virginia and North Carolina.
The company’s home delivery service benefited from the pandemic, with annual gross revenue jumping from $79 million in 2019 to an all-time high of $116 million in 2020, according to the filing. In 2020, Oberweis Dairy received a federal Paycheck Protection Program loan for nearly $5.7 million, which was forgiven in 2021.
But the company was unprofitable in the post-pandemic landscape, with annual revenues falling to $95 million in 2023, according to Monday’s declaration. Joe Oberweis resigned his position in May of that year, the filing said.
In a message Monday, Joe Oberweis said he is no longer at the helm of the dairy business, which has 1,149 employees, including 933 who work part time, according to the filing.
“I left about a year ago and am not involved,” Oberweis said.
In October 2023, Oberweis Dairy retained investment banking firm Livingstone Partners in an effort to find a buyer. After hosting tours for five potential purchasers, Oberweis Dairy signed a letter of intent in January with a group of investors that agreed to serve as stalking horse bidders — essentially setting a floor for the purchase price.
But in late March, with no other offers in hand, the investor group withdrew its stalking horse bid, prompting Oberweis Dairy to seek Chapter 11 bankruptcy protection, according to the filing.
The Oberweis name became synonymous with more than milk in the new millennium when Jim Oberweis, chairman of the dairy and grandson of its founder, launched a string of high-profile but failed bids for Illinois political office as a Republican candidate.
Oberweis, 77, who lives in Sugar Grove, ran unsuccessful campaigns for U.S. senator in 2002, 2004, and 2014, when he won the Republican nomination but lost to longtime incumbent, Democrat Dick Durbin. He lost the Republican primary for governor in 2006, and came up short in two bids for U.S. Congress, narrowly falling in 2020 to Democratic incumbent Lauren Underwood in the west suburban 14th District.
The dairy magnate won a seat as an Illinois state senator in 2013 for the 25th District, where he served as Republican spokesperson for the Labor and Commerce Committee. Oberweis left his state senate seat in 2021.
Efforts to reach the elder Oberweis Monday were unsuccessful.
rchannick@chicagotribune.com