Merisant Worldwide Inc., the privately-held company behind sugar substitute Equal, has filed for Chapter 11 bankruptcy protection.

The company reported a debt load of more than half a billion dollars back in November, and the company's declining market share in the face of competitors like Splenda combined with a lack of financial flexibility pushed it into bankruptcy.

According to The Wall Street Journal (subscription required), the company plans to convert a significant amount of its debt into equity and doesn't even think it will have to lay off employees. CEO Paul Block said the filing will free up cash to invest in supporting PureVia, a new product recently launched in partnership with PepsiCo (NYSE: PEP). Merisant is selling it in packets and Pepsi will be using it in some of its products.

No word yet on whether Pepsi is so sure a partner's bankruptcy will have no effect on their relationship. And a bankruptcy in a recession for a company with declining market share that won't result in job cuts or any other impact on operations?

It sounds like the corporate spin machine is running on overdrive.