The channel is leaving Chapter 11 with $ 177 million in debt, including exit funding.
California Pizza Kitchen announced Thursday that it has emerged from bankruptcy after paying off $ 225 million in debt.
The plan was approved in a Texas federal court.
According to the restaurant, which went bankrupt with around 200 stores across the system, the restructuring plan was the result of months of negotiations with lenders that received near unanimous support. CPK is now saddled with $ 177 million in debt, including exit funding to support the business. The restaurant went bankrupt with approximately $ 400 million in debt. In addition, debt maturities were extended until 2024 and CPK was able to negotiate rent concessions for the majority of its leases.
According to the plan, 96.5% of the brand’s equity will go to senior lenders, according to Law360. The remaining portion and $ 1.75 million in cash will be divided among the unsecured creditors.
“We are delighted to have completed this process quickly and thank our guests, franchise partners, employees and supplier partners for their continued support,” said Jim Hyatt, CEO of CPK, in a statement. “Going forward, we are focused on safely delivering our innovative California-inspired cuisine to our CPK customers and accelerating the momentum we have created in our offsite operations during COVID. We are energized by the opportunity that awaits us and look forward to this new phase of growth. “
Prior to declaring bankruptcy, CPK closed 17 corporate stores in the United States over COVID and lease issues, and closed eight more in court proceedings. No additional closure is planned.
As part of its restructuring plan, CPK’s other option was to sell its assets, a process it had explored before the crisis. However, bankruptcy documents show that neither party submitted a qualified offer by the deadline.
Prior to the COVID pandemic, CPK faced increased competition from quick casuals and the rise of third-party delivery providers. It also suffered from the continued decline in attendance at shopping centers. The restaurant hired a new management team to implement a multi-year turnaround strategy, and in fall 2019 the chain hired a company to explore M&A and restructuring operations.
A sales process was quickly started, but it was interrupted by the pandemic. In the last week of March, weekly net sales were $ 2.5 million, down 77% from 2019. At the time, CPK had shut down 46 units that could not operate Offsite. Due to the dire financial situation, the restaurant received a $ 30 million bridging loan, but those funds were depleted in July. The brand had only $ 13.5 million in cash and about four months of unpaid rent obligations at most locations.
During the pandemic, CPK used web-based delivery and relationships with Uber Eats, Grubhub, Postmates and DoorDash in its hub to premises only. He also created CPK Market, a way for customers to purchase traditional menu items and groceries. Before COVID, on-site dinners accounted for 78% of the activity.