Iconic Restaurant Chain Friendly’s Files for Bankruptcy
(Bloomberg) -- Friendly’s Restaurants LLC, an iconic chain on the East Coast of the U.S. known for its sundaes and “fribble” milkshakes, became the latest dining institution to go bankrupt amid the pandemic.
The company filed for Chapter 11 protection in Delaware late Sunday, according to court papers, and plans to sell itself for $2 million. It listed estimated liabilities of $50 million to $100 million, and estimated assets of $1 million to $10 million.
FIC Restaurants Inc., which operates the Friendly’s brand, will sell substantially all of its assets to Amici Partners Group, an affiliate of the owners of restaurant chains including Red Mango frozen yogurt shops.
Nearly all of Friendly’s 130 corporate-owned and franchised restaurant locations will likely remain open subject to pandemic limitations, it said. The company employs 34 full-time staff at its Massachusetts corporate headquarters and 1,664 restaurant workers on the East Coast.
Although the coronavirus forced restaurants to temporarily close earlier this year, causing a “dramatic decline in revenue,” according to FIC’s Chief Restructuring Officer Marc Pfefferle, the company had been in trouble for a while.
“The business had been losing money for some time, and the Debtors had been routinely borrowing under their credit facilities as that was the only way to sustain operations,” Pfefferle said.
Their efforts included shutting down unprofitable locations, reducing fixed costs and changing the brand’s menu and marketing strategies. After soliciting a number of potential buyers, they received interest from five companies in January, a list which was then whittled down to only one: Amici.
Under the terms of the agreement, which was dependent on FIC filing for Chapter 11 bankruptcy, Amici will purchase FIC for $1,987,500. “While the purchase price is not substantial, the sale allows the business to continue, the Friendly’s Restaurants brand and thousands of jobs across the corporate-owned and franchised locations to be saved, the franchisees to be protected and served, and the overall claims pool to be dramatically reduced,” Pfefferle said.
The sale is expected to close by the end of 2020.
The coronavirus has dragged down sales at restaurants around the world, and led many already-struggling eateries to buckle under debt loads. Pizza Hut franchisee’s NPC International Inc., the holding company of Chuck E. Cheese CEC Entertainment Inc. and the U.S. arm of Le Pain Quotidien have sought bankruptcy protection since the Covid-19 crisis started.
This isn’t the brand’s first brush with bankruptcy. In 2011, Friendly Ice Cream Corp. and its subsidiaries, the operator of the brand and a nationwide distributor of ice cream products, had entered Chapter 11.
The case is In re FIC Restaurants Inc., 20-12807, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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