Boston-Based Cosi Files For Chapter 11 Bankruptcy
Cosi of Boston, the fast-casual restaurant company, has filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Massachusetts. Cosi is an international fast food restaurant company, and its menu features made-to-order sandwiches, hand-tossed salads, bowls, breakfast wraps, melts, artisan flatbread pizzas, snacks and desserts.
Company officials said they initiated a process to preserve value and accommodate an orderly going-concern sale of Cosi’s business operations. Cosi’s board of directors unanimously determined that a sale in Chapter 11 is in the best interest of the company and its creditors. The process allows Cosi to continue normal business operations during the Bankruptcy Court-supervised sale process.
Prior to the Chapter 11 filing, the company closed 29 of its 74 company-owned restaurants. The 31 franchised locations are unaffected. The plan outlines a fast-track process that will allow Cosi to emerge from the restructuring under new ownership and with an improved financial position and stronger brand. Cosi has obtained approximately $4 million in post-petition debtor-in-possession financing, which, subject to Bankruptcy Court approval, will provide the company with liquidity to maintain its operations in the ordinary course of business during the Chapter 11 process.
“We worked very hard to avoid this step,” said Mark Demilio, Cosi’s board chairman. “With the advice and support of outside advisors, we’ve explored multiple paths, including raising capital through equity and/or debt in either public or private transactions, selling the company outside the bankruptcy process, selling certain assets of the company, and other transactions to restructure the balance sheet or raise capital, while also focusing on attempting to improve sales, reduce costs and exit underperforming locations. It’s become clear that, despite the extensive efforts by the company, no such transactions are achievable at this time, that the company cannot continue to operate in its current financial condition, and that the best alternative for the company and its creditors would be to accomplish a sale through the bankruptcy process.”
Patrick Bennett Sr., interim CEO of Cosi, added, “This was a difficult step, but it was necessary to address our liquidity issues. Cosi’s core business and franchise base remain intact, and we filed with the liquidity resources necessary to carry out the restructuring plan. We believe this process will allow the company to right-size its balance sheet, reduce its debt and focus on improving the business and stabilizing
