Debt, Mismanagement Lead Restaurant Chain to Bankruptcy
The restaurant business is a difficult one for small, local establishments as well as large, international chains. It is not uncommon for a Rockville resident to see a new restaurant pop up, only a year later to see its doors closed and a new occupant moving into the former entity’s space. One large and popular fast-casual restaurant chain recently had to file for bankruptcy in order to attempt to avoid such a fate for its many stores.
Cosi Inc., the company that operates Cosi restaurants around the country, recently filed for Chapter 11 bankruptcy. The business has been financially suffering for some time, posting significant losses since the last year. The chain also fired its chief executive officer in recent days, claiming that the former boss failed to prepare the business to overcome its financial problems.
Cosi had planned to sell itself to its creditors and another financial institution, but it found itself embroiled in a separate agreement with the parties that had lent it money. Though it has begun to close some of its stores and has taken steps toward better money management, it is still in need of bankruptcy protections to continue its survival.
Business bankruptcy, under Chapter 11 bankruptcy, allows an entity to prepare a restructuring plan for its continued success. Cosi will have to come up with a plan that its bankruptcy court will approve, otherwise it may see its efforts to remain financially healthy derailed. After it settles its legal disagreements with its creditors and develops a cogent restructuring plan, it may be able to secure the bankruptcy protections it needs to continue operating restaurant sites around the country.