Piccadilly would be owned by Atalaya under proposal
Piccadilly Restaurants would become the property of New York investment firm Atalaya Capital Management under a bankruptcy plan proposed by the fund and the Baton Rouge cafeteria chain’s unsecured creditors committee.
However, Piccadilly’s owner, California-based Yucaipa Cos., is expected to reject the plan, U.S. Bankruptcy Court records show. If the plan were to be approved, Yucaipa Cos., would no longer own any part of the cafeteria chain.
In July, Piccadilly filed its own reorganization plan, which called for placing the chain’s assets into a newly created holding company. The holding company would use those assets to back payments to some unsecured creditors. Piccadilly also would negotiate new financing with Atalaya, and Yucapia would provide a yet-to-be-determined cash advance to Piccadilly.
Under the competing plan proposed by Atalaya and the unsecured creditors committee, a newly reorganized Piccadilly would issue two notes totaling $25.8 million to cover money owed to Atalaya, bankruptcy court records show. Both notes would carry an annual interest rate of 4.75 percent and mature in three years.
Atalaya would convert the remaining $9.1 million Piccadilly owes it into ownership of the reorganized company.
Piccadilly also would borrow $4.8 million to pay unsecured creditors, bankruptcy court records show. Atalaya would provide a $6 million line of credit to Piccadilly.
The proposed reorganization plan also would establish a three-person board to help oversee the payment of allowed claims. An administrator would be paid $40,000 per year to manage claims for unsecured creditors.
Piccadilly officials declined to comment on the proposal. Attorneys for Atalaya and the unsecured creditors committee could not be reached for comment.
The bankruptcy court will have to approve a reorganization plan, though no date has been set yet for a hearing on the plans.
Meanwhile, Piccadilly continues to lose money, bankruptcy court records show.
In August, the company lost $1.7 million on sales of $10.3 million, according to the most recent operating report filed with the bankruptcy court.
The company has turned a monthly profit only once since filing for protection from its creditors in September 2012. Piccadilly claimed then that Atalaya’s “aggressive legal maneuver” — trying to seize all of the restaurant chain’s assets — forced the bankruptcy filing.
Atalaya claimed Piccadilly had not made a payment on the $26 million loan in more than a year.
Piccadilly borrowed the money from Wells Fargo in 2006, and Atalaya bought the debt from the bank in April 2012. Atalaya said it had worked for three months with Piccadilly and Yucaipa to restructure the debt. But at the last minute, Yucaipa tried to renegotiate the deal.
Founded in 1944, Piccadilly operates more than 60 restaurants and over 80 food service locations in 11 states throughout the southeast.