The COVID-19 pandemic and extended shutdowns across the state have caused many popular restaurant chains to file for bankruptcy in San Diego. Friendly’s, an East Coast restaurant chain best known for its ice cream, filed for chapter 11 bankruptcy protection this week. The Western Massachusetts-based company that owns Friendly’s, has announced that an investor will purchase the 130 corporate-owned and franchised Friendly’s restaurant locations. Most of them will remain open during the sale and throughout the bankruptcy process. The company requested a hearing next month for the approval of their bankruptcy petition.
Restaurants Filing for Chapter 11 Bankruptcy?
Several other well-known and popular restaurants have also filed for chapter 11 bankruptcy, including the following:
- FoodFirst Global Restaurants: This corporation owns several popular restaurants, including Brio Italian Grill, Bravo Italian Kitchen, and Buca Di Beppo. They filed for Chapter 11 bankruptcy on April 10th.
- Garden Fresh Restaurants: This corporation owns sweet tomatoes and Souplantation, filed for Chapter 7 bankruptcy in May. As a result of the Chapter 7 bankruptcy proceeding, they will be liquidating and closing all 97 restaurants.
- Chuck E. Cheese: The parent company of Chuck-E-Cheese has filed for chapter 11 bankruptcy, sold all 98 locations, and plans to reopen 40 of them as part of the bankruptcy process.
- NPC International: This parent Corporation is a significant franchisor for Pizza Hut and Wendy’s restaurants. They filed for chapter 11 bankruptcy in July and reached a deal with Pizza Hut to close 300 of their most underperforming restaurant locations.
- California Pizza Kitchen: The owner of this popular California restaurant chain has filed for chapter 11 bankruptcy and plans to keep its 200 restaurants open while it agrees with their creditors.
- Ruby Tuesday: Ruby Tuesday is another restaurant that has needed to file for chapter 11 bankruptcy. As mentioned above, they will permanently shut down some of their locations and keep others open during the bankruptcy restructuring process.
The Benefits of Filing for Chapter 11 Bankruptcy
There is a reason why so many restaurant chains are filing for chapter 11 bankruptcy instead of Chapter 7 bankruptcy. Mainly, restaurants can keep their businesses open when they file for chapter 11 bankruptcy. During a chapter 11 bankruptcy reorganization, they can ask the bankruptcy court for an automatic stay on all creditors to give them time to develop a plan.
Businesses filing for Chapter 11 bankruptcy can also preserve their business and keep their business name, customer base, and goodwill while they go through the bankruptcy process. Should the companies need to do so, they can sell their assets that are encumbered by liens. They can also use the chapter 11 bankruptcy process to extend payments of their unsecured debts for a period of up to five years.
Contact a San Diego Bankruptcy Lawyer Today
If you are considering filing for bankruptcy in San Diego, BlcLawCenter.com is here to help. Contact us today to schedule your initial consultation.