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Popular Sandwich Chain Cosi Files for Bankruptcy

Posted on in Bankruptcy Attorney

Although its stores in the Chicago area remain open, Boston-based fast casual sandwich chain Cosi has filed for Chapter 11 bankruptcy. In total, 29 of the company's 74 corporate-owned locations were closed in September 2016. In addition to these corporate-owned stores, there are 31 franchise Cosi locations in the United States. All of these locations are still open. The goal is for Cosi's lenders to purchase the eatery and reorganize it under a Chapter 11 bankruptcy plan.

Chapter 11 bankruptcy is designed to give companies the opportunity to restructure their operations to become profitable again. Although bankruptcy is not the right choice in all situations where a business owner is facing a substantial amount of debt, it can be the right choice for many. If you are considering filing for bankruptcy, speak with an experienced bankruptcy lawyer before you proceed.

Hard Times for Cosi

Cosi has not reported an annual profit since 1998. In August 2016, the company reported a loss of $3.1 million and a total sales figure of $22.3 million. According to court documents, it has between $10 million and $50 million in debt.

Although fast casual restaurants like Cosi have grown tremendously in popularity over the past decade, many have failed to gain a foothold in the American eatery scene. Some saw early success, then slowed to a stop, some sputtered and ultimately failed, and others simply never gained the traction required to become profitable. Cosi did not report a specific reason for its current status other than the “extensive failure to recognize Cosi's financial troubles” of former CEO Robert Dourney, a statement the company's board made in August 2016 when it voted to fire him.

Selling the Company is Step #1 in Reorganization

The goal of any Chapter 11 bankruptcy plan is for the filing company to eventually become profitable again. Cosi's bankruptcy is no different. In many Chapter 11 plans, the filing company hopes to sell its assets to a holding company or management group. This not only infuses new money and perspectives into the company, but relieves its debts. According to company officials, one of Cosi's goals for the bankruptcy is to stabilize its brand. This can mean focusing on the current locations, rather than opening new locations, as well as taking steps within these existing locations to fix what was not previously working. One strategy may be to save money by paring down the menu or by automating certain parts of the ordering process.

Work with an Experienced Palatine Bankruptcy Lawyer

If you are a business owner considering filing for bankruptcy, weigh all your options with an experienced bankruptcy lawyer before you proceed with your case. To learn more about the bankruptcy process and what it could mean for you, speak with a member of our team of bankruptcy lawyers at Newland & Newland, LLP. Contact us today to schedule your free legal consultation in our office. We serve clients in the North Chicago, Fox Lake, Zion, Winthrop Harbor, Waukegan areas from out our office located in the prestigious 180 North LaSalle street building in Chicago.

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