According to a U.S. Securities and Exchange Commission filing, cookie retailer Mrs. Fields Famous Brands LLC has announced plans to file for Chapter 11 bankruptcy protection to help restructure its business.
Modest Cookie Beginnings for Mrs. Fields
Mrs. Fields was started in 1977 by Debbi Fields, a young mother who made cookies from scratch at her first location in Palo Alto, California. In 1990 the company began franchising stores. In 2000 it took over control of TCBY (“The Country’s Best Yogurt),” through a $140 million cash buyout with Capricorn. The company now licenses and franchises about 1,200 Mrs. Fields Cookies and TCBY frozen yogurt locations worldwide.
The company has begun soliciting votes from creditors for a “prepackaged” bankruptcy reorganization plan, allowing creditors to vote on certain aspects of the plan prior to filing for bankruptcy.
More than two-thirds of its bondholders have agreed to vote in favor of the prepackaged plan. Their support is contingent upon the company submitting its bankruptcy filing to the court by August 25.
The company plans to continue doing business in addition to hiring Blackstone Advisory Services to explore possibly selling TCBY.
According to the regulatory filing, Mrs. Fields would have been unable to make an interest payment in September. The company has about $196 million in publicly traded debt. It has struck a deal with its equity sponsor Capricorn Investors III LP to modify certain financial terms and revise timelines under the terms of their investment agreement.
Restaurant and food companies are struggling as higher gasoline prices and rising ingredient costs erode sales and profits.” There are several food retailers right now that are mall-based that are under pressure,” said Marti Kopacz, managing partner of the restructuring group at accounting firm Grant Thornton. “Food that is out of the home and food that is arguably discretionary is going to come under pressure when people don’t feel that they’ve got that discretionary income in their wallets.”
For information and guidance on bankruptcy, you need the experts at Resnik Hayes Moradi LLP.
Source: Reuters, Cookie chain Mrs. Fields to file for bankruptcy, August 15, 2008