As part of the filing, Friendly’s will enter a sale process with an affiliate of its current owners, Sun Capital Partners, as the lead or “stalking horse” bidder to quickly restructure the company.
Friendly’s said it received a commitment for about $70 million in financing, which, along with the company’s cash flow, will provide the working capital necessary to meet its ongoing obligations during the restructuring.
“The strategic decision to pursue a financial restructuring will allow us to proactively and quickly improve our financial position and ensure we have the resources to build a better and stronger Friendly’s,” Chief Executive Harsha Agadi said.
Friendly’s bankruptcy filing came a day after leading Mexican restaurant operator Real Mex Restaurants filed for Chapter 11.
Several other restaurant and food companies have struggled as food costs have risen and the U.S. economy has limped out of a deep recession, with prepared food maker Chef Solutions Holdings LLC also seeking bankruptcy protection on Tuesday.
Restaurant chains including Perkins & Marie Callender’s Inc, Sbarro Inc, Fuddruckers and Charlie Brown’s Steakhouse have recently filed for bankruptcy, as did chicken producer Allen Family Foods Inc.
Friendly’s Restaurants Franchise LLC listed estimated assets and liabilities in the range of $10-$50 million, whereas another unit Friendly Ice Cream Corp listed liabilities and assets of $100-$500 million.
As part of the restructuring Friendly’s said it will close down 63 underperforming restaurants.
However, 424 Friendly’s restaurants will be open for business as usual during the company’s financial restructuring and there is expected to be no impact to manufacturing and distribution operations.
The case is in re: Friendly’s, Case No. 11-13166 and 11-13167, U.S. Bankruptcy Court, District of Delaware.