Playa Vista, Calif. — California Pizza Kitchen (CPK) is the latest fast-casual restaurant chain to file for bankruptcy protection due to strain brought on by the coronavirus (COVID-19) pandemic.
The company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on July 30, 2020 in order to “close unprofitable locations, reduce its long term debt load and quickly emerge from bankruptcy as a much stronger company,” according to the filing. The Playa Vista, Calif.-based company did not release a list detailing which of its 200 restaurants it plans to close.
CPK is set to receive $46.8 million in debtor-in-possession financing, enabling the ongoing operation of its locations, continued payments to vendors and employees, and the provision of ongoing commitments to stakeholders while the company is in the Chapter 11 process. The company currently has $13 million of cash on hand and has not paid rent for the past several months at a majority of its locations, according to reports by CNN.
CPK plans to exit the Chapter 11 process in under 3 months. “The unprecedented impact of COVID-19 on our operations certainly created additional challenges, but this agreement from our lenders demonstrates their commitment to CPK’s viability as an ongoing business,” says Jim Hyatt, CEO of CPK.
The company closed 46 of its restaurants and obtained $30 million worth of emergency financing from lenders already in April, but revenues were still 40% lower than 2019 levels as of the last week of June, according to reports by Bloomberg.
Kirkland & Ellis is serving as legal counsel to CPK, Guggenheim Securities is the company’s financial advisor and investment banker, while Alvarez & Marsal Inc. is restructuring advisor. Gibson, Dunn & Crutcher LLP is acting as legal counsel for the group of first lien lenders and FTI Consulting Inc. is acting as its financial advisor.
— Katie Sloan