Law360 (September 11, 2020, 10:56 PM EDT) -- The U.S. operator of the French bakery chain Maison Kayser filed for Chapter 11 protection Friday in New York bankruptcy court, estimating more than $50 million in liabilities stemming, in part, from the coronavirus pandemic's impact on the restaurant business and revealing plans to sell off its New York City-area bakeries.
Cosmoledo LLC and its subsidiaries told the court that Aurify Brands LLC is a prospective buyer. On Sept. 4, Cosmoledo told the New York Department of Labor it was laying off 708 workers due to "unforeseeable business circumstances prompted by COVID-19." It had placed the workers on temporary leave in March and April but permanently separated with them earlier this month.
According to Maison Kayser's website, the "authentic artisanal boulangerie" was founded by Eric Kayser in Paris in 1996 and now has more than 100 shops in more than 20 countries.
"In August 2012, the first Maison Kayser opened in the United States, on the Upper East Side in New York," the site says. "Immediately celebrated by the customers and the press as having the best baguette of NY, Eric Kayser has since opened several bakeries in Manhattan, to meet the demand of its customers in different neighborhoods."
Cosmoledo said in filings Friday that it had initially planned a national expansion "in a relatively short period of time," but in early 2019 it became clear that the overhead and performance of the new "out of town" bakeries were "too great a drag" on the company's profits.
The company restructured and reformulated accordingly, it said, with a new strategy that was put in place throughout 2019 and completed in the first quarter of 2020.
"At approximately the same time this restructuring was nearing completion, the debtors' business was devastated by the global COVID-19 pandemic," Cosmoledo said. "The company furloughed approximately 800 employees and shuttered its operations. At the time, it was anticipated that in-store dining would resume, and the company could reopen in June."
But it became clear that New York City's phased reopenings wouldn't allow enough business operations for the company to recover.
"After analyzing the financial impact stemming from the macro economic factors impacting the restaurant industry, of the loss of in-store dining revenue and the continued overhead required to sustain even limited operations (take-out and delivery), the company determined that there was too great a risk that future operations would fail to generate sufficient capital to repay its obligations in the ordinary course of its business and continue profitable operations," Cosmoledo said.
The company began seeking restructuring alternatives in mid-July, it said.
In May, after Le Pain Quotidien filed for Chapter 11 protections, an affiliate of Aurify, LPQ USA LLC, offered $3 million to take over the business, plus deposits to provide adequate assurance that unavoidable payments will be made and assumption of some liabilities. LPQ also provided $522,000 in loans needed to commence the Chapter 11 and cover other costs, as well as a $3 million debtor-in-possession loan.
Cosmoledo is represented by Andrew R. Gottesman of Mintz & Gold LLP.
The case is In re: Cosmoledo LLC, case number 1:20-bk-12117, in the U.S. Bankruptcy Court for the Southern District of New York.
--Editing by Breda Lund.
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