California Pizza Kitchen Gets Court Approval to Exit Bankruptcy
by: Lou Hirsh | CoStar News
The U.S. Bankruptcy Court approved a reorganization plan that allows the California Pizza Kitchen restaurant chain to exit bankruptcy as it reduces its locations and eliminates more than $220 million in debt among other restructuring moves.
The Los Angeles-based company, with more than 200 full-service dining locations, filed for Chapter 11 bankruptcy protection in July as one of several restaurant operators taking similar financial steps this year with pandemic-related closings and capacity restrictions.
California Pizza Kitchen plans to emerge from bankruptcy in November with the full support of its creditors and equity holders, officials said in a statement.
CEO Jim Hyatt said the company will be “accelerating the momentum we have created in our off-premise business during COVID,” referring to heightened deployment of pickup and delivery services.
The consensual plan of reorganization, approved Thursday by the U.S. Bankruptcy Court in Houston, follows months of negotiations with creditors.
It includes what the company described as a “right sizing of its lease footprint,” much of which has already taken place during the restructuring process, including the closing of eight locations. The company closed 17 locations prior to the July bankruptcy filing.
Upon emerging from bankruptcy, the company intends to eliminate more than $220 million in existing funded debt from its capital structure and face no near-term debt maturities. California Pizza Kitchen is expected to emerge with total debt of $177 million including additional exit financing, providing capital to support its ongoing business.
The court approval of the restructuring comes after executives failed to find a buyer for the company after a one-year search. Despite the bankruptcy filing, California Pizza Kitchen has recently opened a new franchised airport location in Salt Lake City and others at retail malls in Asia.