Friendly's Ice Cream files for Chapter 11
Oct. 5, 2011
by Eric Schroeder
WILBRAHAM, MASS. — Friendly Ice Cream Corp. filed for Chapter 11 bankruptcy protection on Oct. 5 in the U.S. Bankruptcy Court in the District of Delaware. The company operates more than 400 restaurants serving hamburgers and ice cream throughout the northeastern United States. The company cited “the challenges of the current economic downturn, significantly increased costs, particularly in commodities such as cream, rents that exceed current market rates and certain of the company’s current unrelated liabilities” as reasons for the filing.
As part of the process, Friendly’s said it will enter a sale process with its current owner, Sun Capital Partners, as the lead, or “stalking horse” bidder.
Also as part of the restructuring, Friendly’s said it already has closed 63 of its stores, resulting in the elimination of about 1,260 jobs. But the company said it has secured approximately $70 million in debtor-in-possession financing and that its 424 remaining restaurants will stay open and pay employee salaries and benefits as it reorganizes under bankruptcy protection.
“We have embarked on an aggressive campaign to enhance restaurant operations, improve the guest experience, strengthen our team and expand the company’s successful retail ice cream business,” said Harsha V. Agadi, chairman and chief executive officer of Friendly’s. “I am particularly pleased with the enthusiastic response among our guests and employees to the recently launched ‘High Five’ campaign, which not only provides great meal values but is also revitalizing our brand in the marketplace.”
In the company’s Oct. 5 filing, assets and debts each were estimated in the $10 million to $50 million range.
Friendly’s is the latest in a line of restaurant chains that have filed for bankruptcy in the face of a tough economic climate. Others to file this year include Perkins & Marie Callender’s; Real Mex, which operates El Torito Restaurant and Chevys Fresh Mex, and SSI Group Holding Corp., which operates Souper Salad and Grandy’s restaurant.