Friendly’s Ice Cream Bankruptcy
June 2, 2014 by staff
Friendly’s Ice Cream Bankruptcy, 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. Friendly 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 requested court permission to hold a Dec. 1 auction, followed by a Dec. 5 hearing to approve the sale. Under the proposed timeline, all bids must be submitted by Nov. 24. Potential buyers would have to offer at least $122.6 million in cash to qualify for the auction.
The Sun Capital affiliate is bidding about $120 million, including cash to pay secured lenders and an amount for unsecured creditors. Second-lien noteholders, majority-owned by Sun Capital affiliates, will bid debt owed on $267.7 million in notes.
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