Sandwich and soup chain Cosi Inc (NASDAQ:COSI) finally surrendered to the inevitable and declared Wednesday that it was entering Chapter 11.
Shares slumped 66.26% to $0.055 on volume of 26.23 million shares.
Best known for flatbreads made in-store, Cosi declared bankruptcy after it was unable to recover from a string of losses and customers gave the thumbs down to various menu changes.
The company was unsuccessful in its efforts to arrange additional debt or capital or execute on asset sales.
Last month, Cosi fired chief executive R J Dourney citing “the continued deterioration of operations and financial results and failed efforts to recapitalize the company.”
Cosi Inc (NASDAQ:COSI) blames poor economic conditions for bankruptcy
Restaurant chains have been on the defensive due to the rising minimum wages and a tightening labor market that have made it difficult to find food workers.
This has been reflected in more bankruptcies in the food industry.
Cosi joins other casual food chains in bankruptcy such as Logan’s Roadhouse, Bailey’s Sports Grille and Quaker Steak and Lube.
Cosi Inc (NASDAQ:COSI) financing
According to court documents, Cosi had assets of $31.24 million and debt of $20 million. It received approximately $4 million as debtor-in-possession (DIP) financing to fund operations during Chapter 11 restructuring.
Lenders AB Opportunity Fund LLC, AB Value Partners LP and entities affiliated with Milfam II LP are the DIP lenders and have offered to buy Cosi’s assets as well as serve as a “stalking horse” bidder in a sale process.
“It’s become clear that, despite the extensive efforts by the Company, … (it) cannot continue to operate in its current financial condition, and that the best alternative for the Company and its creditors would be to accomplish a sale through the bankruptcy process,” said Mark Demilio, Cosi’s Chairman of the Board.
“Cosi’s core business and franchise base remain intact, and we filed with the liquidity resources necessary to carry out the restructuring plan,” said Patrick Bennett, Sr., interim CEO.