Friendly Ice Cream Chain Files for Bankruptcy After 76 Years
Friendly Ice Cream Corp., the 76- year-old restaurant chain known for its ice cream and burgers, sought bankruptcy protection from creditors four years after being bought by private-equity firm Sun Capital Partners Inc.
The company, which opened at the height of the Great Depression with one shop in Springfield, Massachusetts, plans to sell itself at an auction with a Sun Capital affiliate as the lead bidder, according to papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
The sale will “quickly restructure the company” and allow it “emerge stronger and more competitive,” Friendly said in a statement. It attributed the bankruptcy partly to “the challenges of the current economic downturn,” rising costs for commodities such as cream, and above-market rents.
The company, commonly known as “Friendly's,” closed 63 restaurants as part of the filing. Another 424 restaurants will remain open, Friendly said. The Wilbraham, Massachusetts-based company also has franchising operations and manufactures ice cream products for supermarkets and retailers throughout the U.S.
Assets and debt exceed $100 million each, Friendly said. The 20 largest unsecured creditors include Bank of New York Mellon Corp., with a claim of $7.8 million; FM Facility Maintenance LLC, with a claim of $3.49 million; and KSL Media Inc., with a claim of $3.36 million.
DIP Loan
Revenue for the first eight months of the year was $329.7 million, according to court papers. Friendly asked for court permission to use about $70 million in debtor-in- possession financing to continue operations while it restructures.
Friendly's founders sold the company in 1979 to Hershey Foods Corp., which introduced the candymaker's products into its sundaes as toppings. In 1988, the company was bought by Donald N. Smith, who launched the Cyclone soft-serve dessert and renamed the chain “Friendly's” in 1989.
The company went public in 1997 at $18 a share and was bought by Sun Capital in 2007 for $337.2 million in cash, or $15.50 a share.
The chain joins other restaurants that have filed for bankruptcy in the past three years amid an economic slump, including Perkins & Marie Callender's, operator of full-service restaurants; Sbarro Inc., operator of more than 1,000 pizza restaurants; and Bennigan's and Steak & Ale, both owned by Metromedia Restaurant Group.
Sun Capital
The Souper Salad and Grandy's brands, owned by affiliates of Summit Investment Management Inc. and Sun Capital, filed for Chapter 11 in September.
Sun Capital, based in Boca Raton, Florida, owns other restaurant operators including Boston Market, Captain D's Seafood Kitchen, Fazoli's Restaurants, Smokey Bones Bar & Fire Grill and Real Mex Restaurants, according to its website. Real Mex and affiliates Chevys, El Torito and Acapulco filed for bankruptcy yesterday in the Delaware court.
The case is In re Friendly Ice Cream Corp., U.S. Bankruptcy Court, District of Delaware (Wilmington), 11-13167.