bakers square

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Permalink Reply by Steve Paterson on April 3, 2008 at 9:21pm

Baker's Square parent files bankruptcy
Dow Jones Newswires
1:11 PM CDT, April 3, 2008
: Baker Square restaurant owner Vicorp Restaurants Inc. and its corporate parent VI Acquisition Corp. entered Chapter 11 protection Thursday, a day after closing 56 of their 306 company-owned restaurants.

In a Chapter 11 petition filed early Thursday with the U.S. Bankruptcy Court in Wilmington, Del., Vicorp listed assets and liabilities each in the range of $100 million to $500 million.

The Denver-based restaurant chain, which also owns Village Inn family -style restaurant, said that accelerating commodity prices and rising labor expenses have placed it under "extreme financial pressure" in recent months. The economic downturn, resulting in shrinking consumer spending in the restaurant industry, was also to blame for its liquidity crisis, Vicorp said.

While it engaged in restructuring talks with a variety of its stakeholders, the restaurant chain said that before a deal could be struck, its liquidity "deteriorated to the point where it became apparent that 1/8it3/8 would not be able to meet all of its current financial obligations."




Filing for Chapter 11 protection was, Vicorp said, the best means to eliminate underproductive operations and restructure its businesses and financial affairs.

Wells Fargo Foothill Inc. and Ableco Finance have agreed to syndicate a $60 million bankruptcy loan for the restaurant chain.

The proposed funding calls for a roll-up of $37.7 million Vicorp owes under an old loan agreement with Wells Fargo.

At a hearing Friday, Vicorp will ask Judge Kevin Gross for permission to tap up to $17.5 million of the loan on an interim basis pending final approval of the full facility.

Without immediate access to the funds, Vicorp said it wouldn't be able to pay its vendors and its 11,000 employees.

Wilmington Trust Co. serves as indenture trustee for holders of the company's 10.5% senior unsecured notes due April 15, 2011. The noteholders' claims total $126.53 million.

Among others holding the largest unsecured claims against the company are: US FoodService Inc., $1.09 million; Evans, Hardy & Young Inc., $624,376; and Realty Income Corp., $300,691.

Vicorp and its parent holding company are asking that the court jointly administer their Chapter 11 cases under case number 08-10623. Reed Smith LLP is representing the companies in the bankruptcy proceedings.

Vicorp operates family-dining restaurants in 25 states and franchises 93 restaurants under the name of Village Inn or Bakers Square. Additionally, Vicorp makes premium pies that are offered at select supermarkets and other restaurant chains.

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Permalink Reply by Jerry Ruta on April 6, 2008 at 5:58am

It doesn't help that Minnesota has created a difficult business environment for restaurants. Minnesota is one of four states in our great republic that does not permit tip credit wages. In July the minimum wage goes up to $6.55 per hour. Next January the minimum wage is projected to be $7.80 per hour as a cost of living index is added to the then current wage. Look for this adjustment each January.

Restaurants employing tipped employees will need to get creative in order to survie.

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