A CHAIN OF POPULAR AMERICAN PIZZERIAS DECLARED BANKRUPTCY

The catering industry in the United States continues to experience an economic crisis. The list of successfully developing restaurant chains that have declared insolvency since 2020 continues to grow. In early September, Dynamic restaurant holding from Bettendorf (Iowa), which manages Happy Joe's Pizza and Tony Sacco's restaurants, declared bankruptcy.

The director of the organization, Tom Sacco, said that he filed an application to the Delaware court with a request to protect the business in accordance with chapter 11 of the Bankruptcy Code. 

Such bankruptcy is often called "reorganization". In this case, the debtor continues to "own" the organization, retaining the powers and actually performing the duties of the trustee.

In this case, the company itself can continue the work of enterprises and even receive borrowed funds with the permission of the court. Now she has to develop a plan that creditors will like. If the necessary number of votes is gathered in his support and the court approves him, the company has a chance to get out of bankruptcy without significant losses. At the same time, the director of Dynamic released his bankruptcy notice a few days after several restaurants in Iowa towns were closed.

It is known that Tom Sacco received the position of chief executive officer of Happy Joe's in October 2020. According to him, he was hired to modernize a half-century-old restaurant brand in the Midwest. In an interview with local television, the top manager said that the company plans to work successfully for at least another 50 years, however, for this it is necessary to restructure.

The total amount of the company's assets is $1,908,481.29 compared to $2,090,675.43 a year earlier. It is also known that recently the cash balance on the company's accounts has decreased by $ 1.85 million. At the beginning of October 2021, it was almost $ 2.15 million, and by the beginning of August 2022, it was only $290.5 thousand.

The reason for the bankruptcy in the company is called the economic consequences of the pandemic associated with rising costs for rent, materials and staff payments.

The debt of Dynamic Restaurant Holdings exceeded $5.3 million on two loans received from the investment company Aavin Equity Advisors, which acted as a partner in the acquisition of both restaurant brands in 2017. In addition, the firm owed $1.2 million on another loan.

At the end of 2021, the owners of Happy Joe's boasted 42 restaurants in various states. Four other restaurants operated under the Tony Sacco's brand. The documents filed with the court on September 2 emphasize that the bankruptcy procedure will affect nine Happy Joe's restaurants and two Tony Sacco's restaurants. Moreover, 5 of the 11 establishments have already closed.

It is known that two franchising firms were not listed in the bankruptcy application: Happy Joe's Franchising and Tony Sacco's Franchising. This means that the bankruptcy may not affect the establishments of both chains operating under the franchise. 

They account for about 90% of all establishments operating under the Happy Joe's brand and almost half of Tony Sacco restaurants.

American experts emphasize that the iconic Happy Joe's restaurants are far from the only ones that have closed this year. In particular, in July 2022, 16 New York restaurants Hale & Hearty were simultaneously closed. In June, Americans said goodbye to the last Howard Johnsons restaurant. Hometown Burger company from Texas closed eight of its restaurants in San Antonio overnight.

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