Piccadilly Restaurants LLC filed for Chapter 11 bankruptcy protection this week, saying restructuring talks with the owner of its debt had broken down.
The 80-unit Baton Rouge, La.-based cafeteria and onsite operator said Wednesday it filed its bankruptcy petition after it learned of what it called an “aggressive legal maneuver” by debt holder Atalaya Capital Management of New York.
Last week, Atalaya filed suit in a state court to appoint a receiver for Piccadilly’s debt, according to Piccadilly’s filing in U.S. Bankruptcy Court. Atalaya was contacted for comment, but had not responded by press time.
“The filing will help ensure a continuation of the Piccadilly brand, provide future employment to our employees and not disrupt service to our customers in any way," Thomas J. Sandeman, chief executive of Piccadilly, said in a statement. “While we are disappointed in Atalaya's behavior at the bargaining table, we believe that the restructuring creates an opportunity for the company to build on its recent success.”
Sandeman said part of Piccadilly’s debt was purchased by Atalaya earlier this year, and a commitment for debtor-in-possession financing of up to $5 million was put in place, providing the company with “ample liquidity.”
“While the current recession has negatively affected operations and cash flow,” he added, “the company continues to produce positive [earnings before interest, tax, depreciation or amortization] results and within the last year has doubled sales of its foodservice division.”
Piccadilly said its foodservice operations in 30 schools in the Southeast would continue to operate.
Piccadilly filed its petition in U.S. Bankruptcy Court in Lafayette, La. The filing said Atalaya acquired its secured debt in April, including $6.9 million of revolving credit, $2.9 million on a letter of credit facility and $16 million in a term loan. The company said another $5.5 million is owed to trade suppliers. Assets and debt are both listed as less than $50 million, the filing said.
Earlier, Piccadilly filed for Chapter 11 bankruptcy reorganization in 2003 and emerged in October 2004.