California Pizza Kitchen Files For Bankruptcy With Plans To Close Its Unprofitable Restaurants

Pizza company California Pizza Kitchen filed for Chapter 11 bankruptcy Thursday, entering into a restructuring agreement with its lenders.

Through the agreement, California Pizza Kitchen said the vast majority of its debt would to be equitized and would allow it to close its “unprofitable” restaurants while reducing its long-term debt load.

The company said it plans to emerge from bankruptcy a “much stronger company” as it secured $46.8 million in debtor-in-possession financing. The DIP financing is expected to allow California Pizza Kitchen to remain in operation while continuing to pay its employees and vendors.

A quick emergence from bankruptcy is expected for the pizza chain, which opened it doors in Beverly Hills in 1985. It said it is aiming to complete the restructuring process in less than three months. The company has more than 200 restaurants in eight countries and U.S. territories.

“Today’s announcement is a step toward a stronger future for California Pizza Kitchen,” Jim Hyatt, CEO of California Pizza Kitchen, said in a statement. “The unprecedented impact of COVID-19 on our operations certainly created additional challenges, but this agreement from our lenders demonstrates their commitment to CPK’s viability as an ongoing business.”

California Pizza Kitchen’s dining rooms were closed because of the coronavirus. The company has reopened its restaurants in locations where state and local guidelines allow. It also offers curbside pickup and delivery.

California Pizza Kitchen hired Kirkland & Ellis as its legal counsel, Guggenheim Securities LLC as its financial adviser and investment banker, and Alvarez & Marsal Inc. as its restructuring adviser.

California Pizza Kitchen joins Chuck E. Cheese and Garden Fresh Restaurants, the owners of Souplantation and Sweet Tomatoes, in filing for Chapter 11 because of the pandemic.