Plant-based chain By Chloe named its stalking horse bidder to acquire the company out of bankruptcy—but that new owner will have to come up with a new name for the concept, according to court documents filed Tuesday.
By Chloe’s parent company, BC Hospitality Group, which declared bankruptcy late last year, said Bain Capital Double Impact Fund, Kitchen Fund and other investors would acquire the struggling chain for $333,000 and assumption of debt, previously listed at up to $150,000 in liabilities.
Those winning bidders previously provided $3.25 million in bankruptcy financing for By Chloe.
The proposed deal is pending bankruptcy court approval.
If approved, the new owners will have six months from the date of the transaction’s closing to remove the By Chloe name from all “restaurants, supplies, digital media and all other assets,” according to court documents.
That ruling is the result of a trademark hearing in which a judge ruled that BC Hospitality Group did not have the rights to sell the By Chloe name without agreement from the chain’s co-founder, celebrity chef Chloe Coscarelli, who has long been embroiled in a fight with the company.
Coscarelli, a former Food Network cupcake competition winner, filed suit against By Chloe’s owners in 2018, alleging trademark infringement. Coscarelli had been ousted from her company the year before after an arbitrator declared she had been “grossly negligent” in handling the brand’s business dealings.
Coscarelli’s 2018 lawsuit came just days after By Chloe nabbed a $31 million investment from the group that would later become the vegan chain’s stalking horse bidders.
By Chloe was once a rising star among emerging fast-casual concepts. The New York City-based chain blamed the pandemic for its need to file for bankruptcy. The chain closed three of its 14 locations last year and saw revenue drop by about 67%, according to the bankruptcy filing.
The chain had previously received a Paycheck Protection Program loan of $2.67 million. It listed unsecured debt of approximately $2.5 million in its Chapter 11 filing.