Piccadilly files for bankruptcy as debt restructuring talks break down
Baton Rouge-based Piccadilly Restaurants announced this morning that it has filed for bankruptcy court protection under Chapter 11 to prevent a New York lender from having a receiver appointed. Atalaya Capital Management filed a lawsuit on Sept. 7 to appoint a receiver, Piccadilly says, after debt restructuring talks broke down. "In response to this unwarranted action, Piccadilly filed [under] Chapter 11 to protect the value of its enterprise and the interests of employees, creditors, and customers, including schools and emergency feeding customers," the company says in a statement. Piccadilly has 86 restaurants, 78 food service contracts and about 3,500 employees. Bloomberg reports Atalaya acquired Piccadilly's secured debt in April, including $6.9 million on a revolving credit, $2.9 million on a letter of credit facility, and $16 million on a term loan. Another $5.5 million is owed to trade suppliers. Total assets and debt are both less than $50 million, according to the Chapter 11 petition. Piccadilly has arranged for $5 million in financing from an affiliate of the owner. If approved by the bankruptcy judge, the new loan would have a lien on assets ahead of Atalaya. Piccadilly has been in bankruptcy reorganization before. It filed a Chapter 11 petition in October 2003, sold the business, and confirmed a Chapter 11 plan again in October 2004. The prior bankruptcy spawned a case that went to the U.S. Supreme Court, establishing a rule that a company in bankruptcy can't escape paying transfer taxes unless a sale takes place as part of the Chapter 11 plan.
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