CEC Entertainment, the parent company of Chuck E. Cheese, has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas citing financial damage caused by COVID-19.
The company, which also owns Peter Piper Pizza, said same-store sales fell 21.9% during the first quarter. It said it plans to use the bankruptcy to restructure its balance sheet and negotiate with landlords and other stakeholders.
“The Chapter 11 process will allow us to strengthen our financial structure as we recover from what has undoubtedly been the most challenging event in our company’s history and get back to the business of delivering memories, entertainment, and pizzas for another 40 years and beyond,” chief executive officer David McKillips said.
As of March, the company operated 612 Chuck E. Cheese and 122 Peter Piper Pizza venues. As of Wednesday, 266 had been reopened. CEC said it expects to keep the venues opened during the bankruptcy.
In a regulatory filing in April, CEC said it was not paying rent. The company estimated its adjusted earnings before interest, taxes, depreciation, and amortization was between $39 million to $43 million for the quarter ended March 29.
In 2014, CEC was taken private by Apollo Global Management in a $948 million leveraged buyout. Last year it terminated a merger with Leo Holdings while recording nearly $29 million in losses. It recorded a loss of $20.4 million in 2018. In its bankruptcy filing, it listed assets and liabilities of $1 billion to $10 billion.
The company’s largest creditor is Wilmington Trust.