Acknowledging it’s taking a “tremendous risk,” fast-casual chain Cosi asked a judge this week to dismiss its bankruptcy case so it can apply for the Restaurant Revitalization Fund—a plan approved Tuesday by the court.
Early this month, Cosi asked a U.S. Bankruptcy Court judge in Delaware to speed up its bankruptcy proceedings so it could take advantage of up to $10 million in federal aid before the funds ran out. Bankrupt restaurants are not eligible for the funding.
But the Boston-based soup and sandwich chain said in court documents that it decided to “pivot” and ask a judge to dismiss its bankruptcy filing entirely.
“The Debtors now believe that they are in the unenviable position of having, as their last, best (and only) chance of survival, the instant request for dismissal,” Cosi wrote in its filing. “This revised approach is not without tremendous risk, and it is possible that it will not succeed and the Debtors will end up liquidating in Chapter 7. However, the Debtors are simply out of options and out of time to pursue any other path to save jobs, save their business and provide a meaningful distribution to their creditors.”
Having the bankruptcy case dismissed gives Cosi “more than a fighting chance,” the company added.
With its motion granted, Cosi will now apply for the federal restaurant aid. While they wait for the application to be processed, the chain will ask its creditors to support its bankruptcy plan.
“In the event that their application is approved, the Debtors would then move to reinstate the cases that were dismissed,” Cosi said. “The Debtors believe that if they obtain an RRF grant, not only would they stave off conversion and liquidation, but they would likely be able to confirm the Plan that they already have on file with the Court.”
Cosi told the court, “These circumstances are so unusual that, admittedly, little direct authority exists.”
Cosi declared bankruptcy in February 2020, its second time since 2016. The struggling chain had closed 30 units a couple of months before the filing and was preparing to put itself up for sale.
Cosi currently lists 27 restaurants on its website, some of which are only offering catering, a fraction of the more than 150 restaurants it operated a decade ago.
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