Operations

Bankruptcy reorganization plans approved for CPK, Chuck E Cheese

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October 30, 2020

Three U.S. pizza restaurant brands at two companies are moving forward with their bankruptcy reorganization plans, thanks to court approval of outlines designed to put the companies back on the path to profitability.

Chuck E. Cheese and Peter Piper Pizza parent company, CEC Entertainment Inc., has reached agreement on a reorganization plan, as well as what it called a value-maximizing transaction with its first-lien lenders, according to a news release. The chain first filed for bankruptcy protection in July.

The other parties in the agreement include unsecured creditors of the company and a group of unsecured noteholders. The plan stipulates that CEC Entertainment's first lien lenders will exchange their debt for equity in the reorganized company.

Both Chuck E. Cheese, and sister brand, Peter Piper Pizza, are continuing to serve diners, while the reorganization takes place under the oversight of U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The court also this month approved $200 million in debtor-in-possession financing to support the Company's ongoing business operations and reorganization expenses.

"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," CEC CEO David McKillips said in the release.

"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," he said. "We look forward to completing our restructuring process and working toward a timely emergence."

As of Oct. 28, 346 company-operated Chuck E. Cheese and Peter Piper Pizza restaurant and arcade venues reopened. The company is based in Irving, Texas.

In the same U.S. Bankruptcy Court in Houston, California Pizza Kitchen said in a news release that its Chapter 11 reorganization plan was also approved, culminating months of negotiations with its creditors. The company has also settled with its unsecured creditors in the case which was first announced in July.

CPK said the Chapter 11 process allowed it to significantly cut its debt load and right-size its lease footprint. Upon emergence, CPK will eliminate more than $220 million of existing funded debt from its capital structure and will face no near-term debt maturities.

CPK will emerge with total debt of $177 million including additional exit financing that the company said will provide the funding needed to support and build on current business.

"We are pleased to have completed this process rapidly and thank our guests, franchise partners, employees and vendor partners for their continued support," CPK CEO Jim Hyatt said in the release. "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."

CPK said it intends to emerge from Chapter 11 next month with the full support of its creditors and equity holders.

It has more than 200 restaurants in eight countries and U.S. territories. It is based in Playa Vista, California.