CEC Entertainment — parent company of Chuck E. Cheese and Peter Piper Pizza eatertainment brands — announced Wednesday that it would be filing for voluntary Chapter 11 bankruptcy protection to “overcome the financial strain” of coronavirus-related venue closures.
“The Chapter 11 process will allow us to strengthen our financial structure as we recover from what has undoubtedly been the most challenging event in our company’s history and get back to the business of delivering memories, entertainment, and pizzas for another 40 years and beyond,” said David McKillips, CEC Entertainment’s CEO said in a statement. “I am incredibly proud of what the CEC team has achieved over the past year […] I’m confident in the strength of our team and our world-class brands and look forward to more fully implementing our strategic plan as we put these financial challenges behind us.”
CEC Entertainment showed signs of financial troubles before filing for bankruptcy. In May, the company filed a lawsuit to prevent a Dallas landlord from evicting them after seeking rent forgiveness during the COVID-19 related economic crisis. The lawsuit followed the formation of a board-level restructuring committee in April to look at a range of strategic alternatives after first quarter numbers saw same-store sales falling 21.9%.
In June, the Wall Street Journal reported that CEC Entertainment was seeking a “a $200 million loan to finance a stay in bankruptcy,” joining the growing number of eatertainment companies, including Punch Bowl Social, that have experienced especially challenging times during the pandemic.
During the bankruptcy process, the company will continue to reopen restaurants that were still closed due to the COVID-19 pandemic, and will continue operations as usual in all 266 Chuck E. Cheese and Peter Piper Pizza locations that have already reopened, including dine-in, delivery and carry-out services, as well as birthday parties and other events.
CEC Entertainment’s franchised locations are not part of the Chapter 11 proceedings.
Weil, Gotshal & Manges LLP is serving as legal counsel, PJT Partners is serving as financial advisor, FTI Consulting is serving as restructuring advisor, and Hilco Real Estate is serving as real estate consultant to CEC Entertainment during this process.
The company expects to discuss financial results for the first quarter of 2020 on June 26, at 8:00 a.m. EST.
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