A federal court in Texas has signed off on California Pizza Kitchen’s reorganization plan for exiting Chapter 11 bankruptcy. According to Bloomberg Law, the plan will hand over ownership of the company to its first-lien lenders.
The same court has approved a Chapter 11 bankruptcy exit plan for Chuck E. Cheese, according to a press release from CEC Entertainment, which owns the kid-friendly pizza chain.
In its own press release, California Pizza Kitchen (CPK) said the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, affirmed the company’s plan, which “received near-unanimous support from all parties entitled to vote” on it.
The plan will eliminate more than $220 million in CPK debt. The company will emerge with total debt of $177 million, including additional exit financing to keep CPK operating.
Although the press release didn’t state it explicitly, Bloomberg Law said CPK’s first-lien lenders “will get either 100 percent of equity in [the] new company or 96.5 percent of equity, depending on whether other creditors stick to a settlement supporting the plan.”
CPK filed for Chapter 11 bankruptcy in July 2020. An October 8 auction to sell CPK’s assets was canceled because there were no qualified buyers.
“We are pleased to have completed this process rapidly and thank our guests, franchise partners, employees and vendor partners for their continued support,” said Jim Hyatt, CEO of CPK, in a statement. “Looking ahead, we are focused on delivering our innovative, California-inspired cuisine to our CPK guests safely and accelerating the momentum we have created in our off-premise business during COVID. We are energized by the opportunity ahead of us and look forward to this new phase of growth.”
The court also approved a plan for Chuck E. Cheese, which filed for Chapter 11 bankruptcy in June. The CEC press release says the company’s first-lien lenders “will exchange their debt for equity in the reorganized company.”
“This is an exciting milestone in our Chapter 11 cases and demonstrates significant positive momentum as we work to position CEC Entertainment for long-term success,” said David McKillips, CEC’s Chief Executive Officer, in a statement. “Our goal from the outset of the Chapter 11 process was to pursue a value-maximizing transaction that will allow us to emerge from bankruptcy protection with a strengthened financial structure and able to fully implement our strategic plan, and we are confident we will achieve those goals with this agreement with our first lien lenders and support from our key stakeholders. We look forward to completing our restructuring process and working toward a timely emergence.”