Cosi Restaurant Chain Seeks Speedy Bankruptcy Process

Restaurant chain Cosi, which is now in bankruptcy, wants to speed up the process so it can gain access to federal aid for restaurants as part of President Biden’s $1.9 trillion COVID-19 relief plan.

The Boston-based “fast casual” chain hopes to have a hearing to confirm its post-bankruptcy plan by June 30, Bloomberg Law reported. Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware has approved Cosi’s request for a hearing on interim approval, set for May 11.

Cosi’s bankruptcy plan, which was filed on April 30, would give all of the reorganized company to pre-bankruptcy secured lenders, which are owed $24 million. Pre-bankruptcy shareholders would, therefore, get nothing. Unsecured creditors would recover about 20 percent of their claims, Bloomberg said, as long as Cosi gets the $10 million in federal aid that it is counting on. Unsecured claims total about $10.6 million, according to Cosi’s disclosure statement.

If Cosi gets the federal aid, it can then reorganize under Chapter 11 bankruptcy — as opposed to Chapter 7, which would mean liquidation of the company.

The Restaurant Revitalization Fund, part of Biden’s American Rescue Plan Act, totals $28.6 billion. The maximum grant amount is $5 million for a single restaurant location, or $10 million for a restaurant with multiple locations. Grants will be administrated by the Small Business Administration (SBA), which is now accepting applications. The goal of the fund is to help restaurants that are small to medium-sized businesses (SMBs) start to recover from the pandemic, which crushed the restaurant sector. The Rescue Revitalization Fund’s aid may go to such things as rent or mortgage money, payroll and utilities, along with “any other expenses that the administrator determines to be essential to maintaining the eligible entity.”

Bloomberg reported that Cosi previously applied for a Paycheck Protection Program (PPP) loan, but the SBA ruled that bankrupt companies could not apply.

Cosi filed for bankruptcy in February 2020, its second bankruptcy filing since 2016.