Baton Rouge-based Piccadilly Restaurants LLC will place its assets into a newly created holding company and use those assets to back the payments to some unsecured creditors, according to the company’s bankruptcy reorganization plan.
The plan also calls for Piccadilly to negotiate a new financing agreement with Atalaya Capital Management, a New York-based investment fund that Piccadilly owes more than $26 million. Piccadilly’s parent, the California-based Yucaipa Companies, will provide a cash advance to Piccadilly.
Details of those arrangements are still being worked out and must be ratified by creditors and approved by the U.S. Bankruptcy Court.
Piccadilly Chief Executive Officer Thomas Sandeman said the company is pleased with the progress made.
Filing the reorganization plan is part of an interim step to exiting bankruptcy, he said. Piccadilly is now negotiating agreements with its creditors.
Although some of the larger pieces remain in flux, some details of the plan have emerged.
Piccadilly plans to pay $2.3 million to Merchants Food Service, which provides the ingredients for the restaurant chain’s recipes. Piccadilly also will borrow $700,000 to settle one class of unsecured claims. Piccadilly will pay 9 percent annual interest on the two-year note.
Yucaipa will appoint an administrator from three people nominated by the Creditors’ Committee to oversee those payments. The administrator will be paid $10,000 per quarter.
Meanwhile, Piccadilly continues to lose money, bankruptcy court records show.
Piccadilly’s June operating report, the most recent available, shows the company lost $882,128 on sales of $10.3 million. The company has turned a profit in only one of the past nine months. In March, Piccadilly had net income of $23,201 on revenue of $13.8 million.
Piccadilly filed for Bankruptcy Court protection in September. Piccadilly claimed Atalaya’s “aggressive legal maneuver” — trying to seize all of the restaurant chain’s assets — forced the move.
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.