California Pizza Kitchen (CPK) has filed Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas.
The company cited the “unprecedented impact” of the COVID-19 crisis on its operations.
“For many restaurants, the COVID-19 pandemic will be the greatest challenge they will ever face; for some, it may also be their last,” chief executive officer James Hyatt said in the bankruptcy declaration.
CPK said it has reached an agreement with 100% of its first-lien loan holders and about 78% of its first-lien term loan holders. Under the restructuring support agreement, it is looking to reduce its debt by $230 million, more than half of its total debt. It would also receive $46.9 million of debtor-in-possession financing. It received $30 million in emergency financing from lenders in April.
CPK said the agreement will allow it to close unprofitable restaurants and emerge from bankruptcy a stronger company.
CPK opened its first restaurant in Beverly Hills, California, in 1985. It was acquired by private equity firm Golden Gate Capital in 2011 but has struggled in the last few years. In 2019, advisers were appointed in preparation for a possible sale or restructuring.
According to the bankruptcy filings, as of the last week of June, CPK’s revenues were 40% lower than they were last year. The company generated 78% of revenue from on-site dining before the pandemic, and it closed 46 restaurants as a result.
“This process will position CPK for success in the increasingly unpredictable casual dining environment, allowing the company to support go-forward operations and preserve thousands of jobs,” the company said in the declaration.
Hearings are proposed for September 2 and October 7.
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