After early reports from the Wall Street Journal that Chuck E. Cheese was looking to file for bankruptcy, the entertainment and restaurant chain has officially done so.
A press release from CEC Entertainment, Inc., the parent company to the beloved chain, announced the entry into Chapter 11 Bankruptcy. It hopes that in doing so, the company can restructure itself to survive the economic hit that the pandemic has levied.
Chuck E. Cheese had been doing okay before the pandemic, as AP reports that store sales went up 3% during 2019. However, the strain of staying closed during the pandemic was a tough pill to swallow for both Chuck E. Cheese and the restaurant industry in general.
Chuck E. Cheese had begun to reopen locations that were closed due to coronavirus, with 266 currently open and more to follow in the coming weeks. It's hoped that these locations, plus the others Chuck E. Cheese plans to reopen, will stay that way throughout the bankruptcy process.
Franchised locations of Chuck E. Cheese aren't affected by the bankruptcy filing.
Chapter 11 bankruptcy allows Chuck E. Cheese to keep running operations while restructuring its organization and financial model to get back on its feet. However, part of the bankruptcy plan, which is approved by a court, may include liquidating some of the company's assets. This may mean that stores will close in the future, but it's possible that won't be the case.
According to the Wall Street Journal, Chuck E. Cheese was looking for up to $200 million in loans to stay afloat earlier in the month, which may be enough to restructure and prevent store closures. We won't know if that's the case for sure, however, until the bankruptcy court approves a final plan that allows Chuck E. Cheese to emerge from bankruptcy.