Piccadilly CEO: We had no other choice but to file for Chapter 11
POSTED: Wednesday, September 12, 2012 - 5:30pm
UPDATED: Wednesday, September 12, 2012 - 5:35pm
BATON ROUGE, LA (NBC33) — Piccadilly is known for its cafeteria-style comfort food. However, the Baton Rouge-based business had to make the rather uncomfortable decision to file for Chapter 11 of the federal bankruptcy code. They say it was all because of an “aggressive legal maneuver” applied by its financial lender, New York-based Atalaya Capital Management.
“There are a lot of things we don’t know yet, Thomas J. Sanderman, CEO of Piccadilly LLC, told NBC33 News. “It’s too early to tell what will happen, but certainly there will be some spirited discussions in court tomorrow.”
The restaurant franchise will head to a Lafayette court room in the afternoon on Thursday, Sept. 13 to deal with pending litigation. It all started last week when the company learned that Atalaya Capital Management filed a lawsuit in state court regarding a secured debt loan the two had entered back in April.
“It [the lawsuit] was totally without notice,” Sanderman candidly explained. “We thought we were in good standing with them.”
Atalaya bought Piccadilly’s debt, which included $6.9 million on a revolving credit, $2.9 million on letter of credit and $16 million on a term loan. Issues regarding that loan prompted the lawsuit from Atalaya. To protect the company, Piccadilly filed for Chapter 11 on Tuesday, Sept. 11.
“This allows us to continue serving our customers, the 30 schools we serve, and the emergency operations we’re working to feed,” Sanderman said. “I didn’t want to do this, but it was unavoidable.”
The decision was one that had to be made in a short amount of time, and all while the company was working on a massive contract with the state.
“We’re working 7 days a week with all the emergency service feedings for Hurricane Isaac,” Sanderman explained. “So far we’ve served 110,000 people during the storm. Our attention was focused on that, not this lawsuit.”
But now, Piccadilly will have to fight to make sure that the company’s 81 locations will remain in business.
“We’re not anticipating any layoffs at the corporate headquarters on Sherwood Forest in Baton Rouge,” Sanderman said. “We have not yet determined whether we will have to close any one of the 81 locations. That may be something we consider in the future.”
For now, Piccadilly has secured a $5 million financial commitment, which Sanderman says is more than enough to keep the company going for some time.
“Let’s keep Piccadilly going for another 80 years,” he said.
NBC33’s David Lippman will have more on this story on NBC33 News at 10:00 p.m.