California Pizza Kitchen (CPK) is the latest big restaurant chain to fall on hard times in the wake of the coronavirus pandemic.
The Los Angeles-based pizza giant on Thursday (July 30) announced that it has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of Texas.
California Pizza Kitchen noted in a press release that the filing was pre-negotiated with its lenders and is designed to enable the chain to “close unprofitable locations, reduce its long-term debt load and quickly emerge from bankruptcy as a much stronger company.”
The deal includes $46.8 million in “debtor-in-possession financing” for the restaurant chain, giving it the ability to continue operating and to pay employees and vendors during the bankruptcy process.
CPK said it hopes to push through the bankruptcy restructuring process in three months.
Jim Hyatt, the chain’s CEO, noted in a statement that COVID-19 played a major role in pushing the company to the financial brink.
The company opened its first restaurant in 1985 in Beverly Hills, with a menu offering California-style pizza and cuisine. Today, CPK has more than 200 restaurants, though that number took a major hit in April, when the company was forced to shutter 46 locations amid various state lockdown measures.
“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,” Hyatt said. “Throughout this process, we will continue to deliver the same innovative, California-inspired cuisine that we have been serving for over 35 years.”
Throughout the bankruptcy process, CPK is hoping to slash its debt by $230 million, or more than half, while bolstering its balance sheet with additional cash from lenders, according to Bloomberg.
At the time of its bankruptcy filing, California Pizza Kitchen had just $13.5 million with which to pay its bills, the news service reported, citing federal bankruptcy court filings.