The week has begun with a pair of bankruptcy filings, both likely caused by the economic effects of the coronavirus (COVID-19) pandemic.
CBL & Assoc. Properties, a major mall operator, and Friendly’s (FIC), a family restaurant chain famous for its ice cream, sought Chapter 11 protection in filings on Sunday and early Monday morning, respectively.
CBL & Assoc. Properties filed for bankruptcy protection after some of its biggest tenants, such as JC Penney, had done the same and stopped paying rent. Mall traffic has plunged since March when the pandemic closed most stores and required mitigation measures like social distancing after they reopened.
Malls have also suffered because of the pandemic-induced shift to online shopping. With most consumers seeking to have purchases delivered, brick-and-mortar stores without a robust online channel have suffered.
The company told the bankruptcy court in South Texas the filing will allow it to reorganize and wait out the pandemic. A filing shows its assets and liability and about even -- between $1 billion and $10 billion each. The company manages 108 properties in 26 states.
Take-out and delivery hurt ice cream sales
Friendly’s, a chain operating mostly on the East Coast, has struggled since the pandemic limited most restaurants to take out and delivery -- something that doesn’t work so well with ice cream. In a news release, the company said it will seek permission from the bankruptcy court in Delaware to sell most of its assets to Amici, a major restaurant operator.
"Nearly all of Friendly's 130 corporate-owned and franchised restaurant locations are expected to remain open subject to COVID-19 limitations, and the transaction is expected to preserve thousands of corporate-owned restaurant team member and franchisee jobs," the company said.
In its filing, Friendly's Restaurants LLC estimated its liabilities at $50 million to $100 million and estimated its assets at $1 million to $10 million. The company said it has enough cash on hand to continue operations and pay its employees and suppliers.