Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Dropping Fast Food Trend Sends Cosi into Bankruptcy
Author: Joel R. Glucksman
Date: October 6, 2016
Key Contacts
Back
Cosi Inc. recently announced that it had filed for Chapter 11 bankruptcy protection, according to Reuters. The upscale fast food chain cited substantial losses in recent years, which prompted the company to pursue a sale of its remaining assets.
Cosi ends up insolvent after struggles
In its bankruptcy documents, the chain claimed that consumer traffic to its fast food locations had fallen significantly in recent years because it failed to adjust to market trends. According to USA Today, following this steep decline, the company had removed its CEO and closed 29 of its 74 chain locations across the country with over 450 workers laid off. The company also listed $15.7 million in net losses on revenues of $88.9 million last year, with another $3.1 million lost this year on $22.3 million in sales through the second quarter.
In turn, its stock collapsed over 63 percent this year, including a recent 1.3 percent drop in recent days. The USA Today reported that as a result, the company listed $31.2 million in assets with $20 million in liabilities.
The reorganization plan for Cosi Inc
Cosi stated in its court papers that it negotiated a sale agreement with its lenders AB Opportunity Fund LLC, AB Value Partners LP and Milfam II L.P. to serve as the stalking horse bidder in its asset auction. Forbes reported that these lenders will set the lowest bids on all of Cosi’s assets. However, the deal is still in question due to a conflict with debtors regarding a collateral deal. In addition, as part of this deal, these creditors will provide $4 million in debtor-in-possession financing to keep the company’s core business and its franchise locations open.
Meanwhile, the plan is to use this funding to provide liquidity to maintain operations during the bankruptcy process.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
When a Child Turns 18: The Gap in Your Family’s Estate Plan
Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]
Author: George McGowan
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Author: Paul Grossman
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
Author: Paul Grossman
How to Protect Your New Jersey Business When Going through a Divorce
The most effective ways to protect your business in a divorce are put in place before one begins: a prenuptial or postnuptial agreement, clean separation of business and personal finances, and divorce contingencies built into your operating or buy-sell agreements. If divorce is already underway, the priorities shift to establishing how the business is classified […]
Author: Jay McDaniel
10 Common Issues in Franchise Disputes
The most common franchise disputes involve breach of contract, franchise termination and non-renewal, intellectual property rights, territorial encroachment, royalty and fee payments, franchisor support obligations, and violations of state franchise laws such as the New Jersey Franchise Practices Act. Franchisors and franchisees can often resolve these conflicts by providing written notice detailing the dispute and […]
Author: Paul Grossman
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Author: Sean M. Pena
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.