California Pizza Kitchen (CPK), facing months of unpaid leases and with a dwindling amount of cash, declared bankruptcy on Thursday, seeking to cut back on its debt load and close unprofitable locations.
The Playa Vista, Calif.-based chain, which operates about 200 locations, has more than $400 million in debt and is mostly owned by the private equity firm Golden Gate Capital along with members of the company’s management team.
The company had been seeking a possible sale since last year before the coronavirus hit. Once that happened, the company received a $30 million infusion of cash, which CEO Jim Hyatt in a bankruptcy court document called a “bridge to negotiate a comprehensive restructuring.”
Yet the company has just $13.5 million in cash on hand and four months of unpaid rent for “the majority of its locations.”
It also acknowledged receiving numerous default notices from landlords and faced lawsuits over unpaid rent.
The company has negotiated a deal with some of its lenders to provide $47 million of financing to get through the bankruptcy process. That would also shave $230 million from California Pizza Kitchen’s debt.
Not all of the company’s lenders support the deal, however. But Hyatt in his filing said CPK plans to use the time to reach a deal with remaining lenders and negotiate with its landlords “to rationalize” its footprint.