CEC Entertainment, the parent of Chuck E. Cheese and Peter Piper Pizzas, has filed for Chapter 11 bankruptcy protection as a result of losses incurred by the coronavirus pandemic. Reuters reports, “sales plunged after restaurants were forced to close as lockdowns were put in place. Chuck E. Cheese was hit especially hard owing to its children’s party and games venues.”
CEC Entertainment has been owned by private equity giant Apollo Global Management since 2014. It controls 612 Chuck E. Cheese outlets and 122 Peter Piper Pizza venues across 47 U.S. states and 16 other countries. CEC Entertainment filed for bankruptcy in U.S. Bankruptcy Court for the Southern District of Texas.
In a court filing, the company said that the past three months have been “the most challenging time in its history.” CEC reported approximately $29 million in losses in 2019, and $20 million in losses in 2018.
CEC Entertainment said that it expects to maintain operations at 266 domestic Chuck E. Cheese and Peter Piper Pizza venues during the Chapter 11 process. “CEC franchised locations operate under separate legal and financial structures and are not included in the Chapter 11 filings,” the company stated.
U.S. and international franchise partners, as well as locations outside the United States, are not part of the Chapter 11 restructuring process. On June 18, a group of CEC Entertainment bondholders suggested putting $100-200 million of new money into the company to extend debt maturities and adding a payment-in-kind option to give the company more flexibility. The bondholder group was working with Ducera Partners as financial advisers and King & Spalding as counsel. Bondholders were advised by investment bank Houlihan Lokey Inc. and law firm Akin Gump Strauss Hauer & Feld.
The U.S. recorded more than 34,500 new COVID-19 infections for a second day, with new cases nearing the peak of 36,188 set April 24. Hospital system officials in Houston, Texas, as well as across Arizona, say their infrastructures are “overwhelmed.” Disney has delayed the reopening of its Disneyland theme park indefinitely. California’s and Nevada’s governors have ordered everyone to wear masks in public at all times. New models predict the coronavirus will kill 180,000 U.S. residents by October. It has already killed 121,117 Americans.