A fast-casual dining chain is filing for voluntary Chapter 11 protection as part of a restructuring effort.
California Pizza Kitchen (CPK) has entered into a restructuring support agreement with its first lien lenders that will equitize the vast majority of its long-term debt. In order to implement this agreement, CPK has filed for voluntary Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas.
This pre-negotiated filing represents a deal with CPK’s lenders and is intended to allow the California-based retailer the ability to close unprofitable locations, reduce its long-term debt load, and quickly emerge from bankruptcy as a stronger company.
Additionally, this agreement contemplates approximately $46.8 million in new money debtor-in-possession financing, which will enable ongoing operation of CPK restaurants, continued payments to CPK’s vendors and employees, and provide for ongoing commitments to stakeholders while in Chapter 11. CPK aims to complete the Chapter 11 process in under three months.
“Today’s announcement is a step towards a stronger future for California Pizza Kitchen,” said Jim Hyatt, CEO of CPK. “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. Throughout this process we will continue to deliver the same innovative, California-inspired cuisine that we have been serving for over 35 years.”
Kirkland & Ellis is serving as legal counsel to CPK, Guggenheim Securities LLC is serving as its financial advisor and investment banker, and Alvarez & Marsal, Inc. as restructuring advisor. Gibson, Dunn & Crutcher LLP is acting as legal counsel for the group of first lien lenders and FTI Consulting, Inc. is acting as its financial advisor.
California Pizza Kitchen operates over 200 restaurants in eight countries and U.S. territories.