Piccadilly Restaurants LLC filed for bankruptcy to prevent the secured lender from having a receiver appointed.
The Baton Rouge, Louisiana-based company has 86 restaurants and 78 institutional food-service customers. Lender Atalaya Capital Management LP started a lawsuit in state court last week to appoint a receiver, Piccadilly said in a filing yesterday in U.S. Bankruptcy Court in Lafayette, Louisiana.
Atalaya, based in New York, acquired the secured debt in April, according to a court filing. Secured debt includes $6.9 million on a revolving credit, $2.9 million on a letter of credit facility, and $16 million on a term loan.
Another $5.5 million is owed to trade suppliers, the company said. Total assets and debt are both less than $50 million, according to the Chapter 11 petition.
Atalaya officials didn’t immediately return a call for comment on the bankruptcy filing.
Piccadilly has arranged for $5 million in financing from an affiliate of the owner. If approved by the bankruptcy judge, the new loan would have a lien on assets ahead of Atalaya.
Piccadilly has been in bankruptcy reorganization before. It filed a Chapter 11 petition in October 2003 in Fort Lauderdale, Florida, sold the business, and confirmed a Chapter 11 plan in October 2004.
The prior bankruptcy spawned a case that went to the U.S. Supreme Court, establishing a rule that a company in bankruptcy can’t escape paying transfer taxes unless a sale takes place as part of a Chapter 11 plan.
The case is In re Piccadilly Restaurants LLC, 12-51127, U.S. Bankruptcy Court, Western District of Louisiana (Lafayette).