Cosi restaurant chain seeks quick bankruptcy
Restaurant chain Cosi, who is now bankrupt, wants to speed up the process so that he can access federal assistance to restaurants under President Biden’s $ 1.9 trillion COVID-19 relief plan.
The Boston-based fast casual chain hopes to hold a hearing to confirm its post-bankruptcy plan by June 30. Bloomberg Law reported. Delaware District Bankruptcy Court Judge Brendan L. Shannon has approved Cosi’s request for an interim approval hearing scheduled for May 11.
Cosi’s bankruptcy plan, which was deposit on April 30, would give all of the reorganized company to pre-bankruptcy secured lenders, who owe $ 24 million. The pre-bankruptcy shareholders would therefore get nothing. Unsecured creditors would collect about 20% of their debts, Bloomberg said, as long as Cosi gets the $ 10 million in federal aid she relies on. The unsecured claims total around $ 10.6 million, according to Cosi’s statement.
If Cosi gets federal help, then he can reorganize under Chapter 11 bankruptcy – as opposed to Chapter 7, which would mean winding up the business.
The Restaurant Revitalization Fund, which is part of Biden’s American Rescue Plan Act, totals $ 28.6 billion. The maximum grant amount is $ 5 million for a single restaurant or $ 10 million for a restaurant with multiple locations. The grants will be managed by the Small business administration (SBA), which is now accepting applications. The fund’s goal is to help restaurants that are small and medium-sized enterprises (SMEs) begin to recover from the pandemic, which has crushed the restaurant industry. Help from the Rescue Revitalization Fund may go to items such as rent or mortgage, payroll and utilities, as well as “any other expenses that the administrator deems essential to maintaining the eligible entity.” .
Bloomberg reported that Cosi previously applied for a Paycheck Protection Program (PPP) loan, but the SBA ruled that bankrupt companies cannot apply.
Cosi filed for bankruptcy in February 2020, its second bankruptcy since 2016.