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The Belgian company's U.S. arm said in court papers it hoped to avert a complete liquidation of its 98 Le Pain Quotidien locations with a proposed $3 million sale of the business to fast-casual restaurant operator Aurify Brands LLC.
The sale to Aurify, which requires court approval, would allow for 35 Le Pain Quotidien restaurants to reopen and would allow some employees who had been terminated to regain their jobs, said Steven J. Fleming, the U.S. division's chief restructuring officer, in a sworn declaration in the U.S. Bankruptcy Court in Wilmington, Del.
Le Pain's bankruptcy filing shows that while some restaurants have adapted to government restrictions on dine-in food service, others have faltered. Mr. Fleming said the company was ill-equipped to deal with state and local restrictions and couldn't make money keeping locations open for takeout or delivery only.
The coronavirus pandemic has pushed a number of financially stretched restaurants to file for bankruptcy, close some of their locations permanently and sell off the remnants.
CraftWorks Holdings Inc., which runs the Logan's Roadhouse, Gordon Biersch and other restaurant chains, closed more than a third of its locations and sold the rest out of bankruptcy at a reduced price, weighed down by the pandemic. Krystal Co., the Southern burger chain founded nearly 90 years ago, is selling itself out of bankruptcy to the same buyer as CraftWorks.
FoodFirst Global Restaurants Inc., the bankrupt parent of the Italian chains Brio and Bravo, is searching for a buyer to scoop up its assets. So is the operator of Bamboo Sushi and QuickFish.
Even before the Covid-19 pandemic kept customers from dining out, PQ New York Inc., which licenses the Le Pain Quotidien brand name from a Belgian division, was in financial trouble.
More than half the company's sales come from the New York City metro area, which is saturated with restaurants, Mr. Fleming said. He said most of the dining industry's recent growth has come from delivery and to-go sales, rather than Le Pain Quotidien's casual dine-in concept.
"Consumers had gravitated more towards the 'grab 'n' go' concept, which provided for quicker transactions by using a simplified menu and a greater level of self-service," he said.
Mr. Fleming also blamed flagging investments in stores, a lagging digital platform and turnover within corporate management.
New York-based Aurify -- which runs restaurants including the Little Beet, Melt Shop, Fields Good Chicken, the Little Beet Table and some Five Guys locations -- has agreed to supply $3 million in bankruptcy financing to ease the proposed sale. The debt claims would be used as currency to purchase the assets, according to court papers.
Law firm Richards Layton & Finger PA is advising PQ New York. Judge John T. Dorsey has been assigned to the case, number 20-11266.