Chuck E. Cheese filed for Chapter 11 bankruptcy protection as a result of prolonged closings of its restaurants due to the coronavirus.
CEC Entertainment, the parent company of Chuck E. Cheese, a restaurant chain and popular children's party venue, and Peter Piper Pizza, filed for Chapter 11 bankruptcy. The company had been having conversations with its lenders to raise money to avoid filing for bankruptcy protection as it continued to negotiate with landlords for help on rent, including deferral, abatement and future rent reduction.
The move reflects the changing nature of social gatherings since the start of the coronavirus pandemic and government-mandated lockdowns. The event-oriented restaurant chain joins other parts of the retail industry that have been disrupted. Retailers that have filed for Chapter 11 bankruptcy protection in the pandemic include Neiman Marcus, J.C. Penney, 24 Hour Fitness, J. Crew and GNC Holdings.
CEC Entertainment listed its assets at nearly $1.75 billion and its liabilities at nearly $2 billion. Wilmington Trust is listed as the company's largest creditor being owed more than $215 million. Trade partners such as Microsoft, Parkway Construction and Associates and IBM were among its other largest creditors.
Of the top 30 creditors, 19 are tied to various landlords throughout the country. National Retail Properties LP, in Orlando, Florida, with Hartman SPE LLC in Houston, BTM Development Partners LLC in New York City, and Regency Centers Corp. in Jacksonville, Florida, being among the landlords named in the filing.
CEC Entertainment expects to maintain operations such as dine-in, delivery and carry-out services, as well as hosting birthday parties during dedicated hours, at its locations through the Chapter 11 bankruptcy process. The company announced in early June it would permanently close 12 of its company-operated venues.
Currently, CEC Entertainment has 266 company-operated Chuck E. Cheese and Peter Piper Pizza restaurants that have safely reopened with health guidelines from the Centers for Disease Control and federal and local government mandates.
In all, CEC Entertainment and its franchisees operate more than 600 Chuck E. Cheese and more than 120 Peter Piper Pizza venues in 47 states and 16 foreign countries and territories, according to the company's website.
However, the company's franchised locations operate under separate legal and financial structures and are not part of the bankruptcy filing. For the corporate-owned locations, CEC Entertainment plans to continue opening those venues and steadily bring more employees back to work during the bankruptcy process.
Part of that strategy relies on CEC Entertainment having "critical conversations" with its landlords to restructure its balance sheet and support its reopening and longer-term plans. Motions have already been filed in the bankruptcy court by CEC Entertainment to pay employees, honor gift cards, continue its existing benefit programs and uphold its franchising and licensing agreements.