CEC Entertainment, the company behind Chuck E. Cheese, has officially filed for bankruptcy protection. The Texas-based company and its domestic affiliates filed for voluntary protection under Chapter 11 of the US Bankruptcy Code, citing the financial strain of venue closures related to the COVID-19 pandemic.
In a statement, CEC announced it would use the time and legal protections available through Chapter 11 to continue discussions with financial stakeholders and landlords, and to restructure its balance sheet to support re-opening plans. Franchise locations and corporate entities outside the US are not included in the Chapter 11 process.
As of this week, 266 company-owned Chuck E. Cheese and Peter Piper Pizza restaurant and arcade venues have re-opened. Subject to ongoing negotiations with its landlords, CEC will maintain operations for these locations throughout the Chapter 11 process (providing dine-in, delivery and carry-out services, as well as hosting birthday parties during dedicated hours, where states allow it). Moving forward, the company plans to continue opening additional locations.
CEC filed customary motions with the Bankruptcy Court that would allow the company to “maintain operations in the ordinary course,” including paying employees, continuing existing benefits programs, honoring gift cards and upholding commitments under its franchising and licensing agreements. In a statement, the company said it expects the motions will be approved.
Weil, Gotshal & Manges LLP is serving as legal counsel, PJT Partners as financial advisor, FTI Consulting as restructuring advisor, and Hilco Real Estate as a real estate consultant in the company’s Chapter 11 cases.
Technicolor recently filed for Chapter 15 in US bankruptcy court. The multinational media company also cited the effect of the COVID-19 pandemic on revenue in its filings.