Recently, Black-eyed Pea restaurants announced that it had filed for Chapter 11 bankruptcy protection. According to National Restaurant News, the company plans to close a portion of its casual dining chain locations.
Black-eyed Pea falls into insolvency
The restaurant chain’s financial struggles have mounted over the last year. WFAA reported that 12 of the company’s restaurants were shut down in Texas last week in the wake of a significant sales decline and operating capital constraints over the last two years. These economic issues were the culmination of the struggles of its Black-eyed Pea’s parent company, Restaurants Acquisition I LLC.
The bankruptcy news represents a bad year
The parent company filed for Chapter 11 bankruptcy protection in December, which caused it to close on of its restaurant locations. According to National Restaurant News, Restaurant Acquisitions I LLC listed stark drops in revenues and capital, as well as back rent owed to several of its dining chain locations. In fact, occupancy expenses had become so expensive for the company’s chain locations that they exceeded revenues. This caused the company to close 15 of its locations, the Dallas Star-Telegram reported.
In its court documents, Restaurants Acquisition I LLC claimed debt liabilities ranging from $10 million to $50 million, compared to only between $1 million and $10 million in assets. Its debtors most notably included over $880,000 owed to US Foodservice and the IRS, which was owed a substantial amount in taxes.
As a result of its insolvency, Restaurants Acquisition I LLC eventually converted its Chapter 11 filing into a Chapter 7 liquidation. Reuters reported that since this time, the company has sold off portions of its remaining assets and closed, or intends to shutter, various other chain locations.
The Black-eyed Pea restaurant chain isn’t the only business in the food industry having to recently file for bankruptcy. For more on this, check out: