Cosi Inc, soup and sandwich chain, has filed for Chapter 11 bankruptcy protection.
The following locations were closed: Philadelphia, PA- Walnut St and Locust St, Bryn Mawr, PA and Mount Laurel, NJ.
Cosi filed for bankruptcy protection in Boston's U.S. Bankruptcy Court. The company listed assets of $31.2 million and debts of $19.8 million. The company in its chapter 11 petition stated economic conditions in its industry have "negatively impacted sales and restaurant-level profits."
Cosi's management and board of directors were unable to secure much-needed additional capital in recent months due to sales results from 29 underperforming stores.
Twenty-nine locations have closed and four hundred fifty employees have been laid off. The remaining restaurants are its "core" locations. More than 1,100 staffers work at these locations.
AB Opportunity Fund LLC, AB Value Partners LP and Milfam II LP, the company's lenders, will provide a $4 million bankruptcy loan, subject to court approval. The lenders will serve as the lead bidder at Cosi's bankruptcy-run auction.
Milfam, AB Opportunity and AB Value provided a $5 million sr. secured promissory note to Cosi in 2014.
There was some interest shown in buying Cosi's profitable locations. Company leadership believes there are buyers that could bid against Milfam, AB Opportunity and AB Value Partners.
In early 2015, company leadership took steps to turnaround the company. The situation improved for a while, sales deteriorated in April due to downward trends in the fast casual dining industry.
Cosi's second quarter 2016 revenue fell $1.6 million to $22.8 million, compared with the same quarter in the previous year.
Cosi announced Chief Executive Officer, R.J. Dourney, would be leaving his post. "Continued deterioration of operations and financial results and failed efforts to recapitalize" led the company to pursue a new CEO.
Patrick Bennett, a member of the Board of Directors, stepped in to fill the role in the interim. R.J. Dourney, former Chief Operating Officer of Au Bon Pain, had joined Cosi in March 2014.
Cosi purchased Hearthstone Associates LLC from R.J. Dourney for $1.7 million.
The company had $950,000 cash on hand at the time of petition filing. At the end of June, the company had $3.1 million.
Cosi said in a press release it plans to appoint a chief restructuring officer. Patrick Bennett will remain in the CEO position.
Seventy-two restaurants and 35 franchise locations are included in the company's portfolio. One thousand five hundred fifty-five people are employed by the company. Most of these employees are part-time workers.