An ice cream and burger restaurant chain, with 76 years in the business, filed for bankruptcy protection on October 5, though they had been purchased by Sun Capital Partners Inc. only four years earlier, as reported by Bloomberg Business Week.
Sun Capital is a private-equity firm and is based in Boca Raton, Florida.
The filing was made in a Wilmington, Delaware, U.S. Bankruptcy Court.
Per the filing, the company is planning on selling itself - with a Sun Capital affiliate being the lead bidder - at an auction which will allow them to "quickly restructure" the company and make way for a reemergence that promises to be "stronger and more competitive."
The bankruptcy is due, in part, to the rising costs of commodities - cream namely - and rents that have been above the going market. The statement outlines that "the challenges of the current economic downturn" is to blame.
Proposed bids for the auction are to be submitted by November 24, with the court's permission, and the sale to be held on December 1.
A December 5 date is also requested for a hearing to approve the sale.
To qualify at the auction, a bid offer must be at least $122.6 million - in cash.
Approximately $120 million is the expected bid from the Sun Capital affiliate. This includes cash to be paid to secured lenders and unsecured creditors.
The majority-owned second lien noteholders owned by Sun Capital affiliates will bid debt owed on $267.7 million in notes.
Sixty-three Friendly's stores coincided their closings with the bankruptcy announcement while 424 still have plans to remain open. The company has franchises nationwide and makes ice cream products for sale in supermarkets and other retailers.
Court documents show the debt listed at $297 million and the assets are valued at over $100 million, with $21.5 million owed to first-lien lenders.
The company recorded revenue at $329.7 million through August of this year.
The Bank of New York Mellon Corp. - the trustee for unsecured noteholders - is owed $7.8 million, followed by FM Facility Maintenance LLC for $3.49 million and KSL Media Inc. for $3.36 million.
There are 17 more large unsecured creditors.
Company lawyer Laura Davis is expected to seek a $50 million loan for funding operations during the company's restructuring process.
Debtor-in-processing financing has been offered in the sum of $71.3 million from Sun Capital affiliates.
Hershey Foods Corporation, in 1979, and Donald N. Smith, in 1988, has owned Friendly's. Each purchase allowed for the company to grow by adding candy products and soft-serve options.
In 1997, at $18 a share, the company went public.
The final sale of the company, in 2007, went to Sun Capital for approximately $15.50 a share totaling $395 million.
Other restaurant bankruptcies made in the last three years include Perkins & Marie Callender's, Sbarro Inc. and Bennigan's Steak & Ale.
Sun Capital owns several restaurant operators.
If you are daunted at the thought of filing a business or personal bankruptcy contact a bankruptcy attorney first.