Happy Joe Files for Chapter 11 Bankruptcy

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Happy Joe Chairman and CEO Thomas A. Sacco signed the voluntary petition filed Sept. 2.

WILMINGTON, Del. — Bettendorf-based restaurant chain Happy Joe’s Pizza has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

happy joe Chairman and CEO Thomas A. Sacco signed the voluntary petition filed on Sept. 2, the same day the company’s public relations firm sent an email saying the company “is undergoing a transformation to a revitalized, modern business model.”

“The vast majority of Happy Joe’s 50+ locations are highly profitable, with their restaurant franchises leading the way that have recently been remodeled or are in the process of being upgraded to the brand’s new modern design, leading to higher satisfaction.” of guests,” the statement said.

In that press release, the pizza chain brags about how it signed more franchise deals and opened new locations in the last 18 months than it did in the previous decade. It also announces the bankruptcy filing, however, it never says the word “bankruptcy”.

The statement says that Thomas Sacco “presented a reorganization plan in two of the four corporate entities.”

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The first entity is the one that operates the company’s restaurants while the second operates Tony Sacco’s restaurants. Tony Sacco and Thomas Sacco are not related, according to the statement.

“Both entities only operate company-owned restaurants and are not associated with any franchised restaurants,” the statement said. “The two franchise entities, Happy Joe’s Franchising and Tony Sacco’s Franchising, were not part of the presentation.”

Thomas Sacco didn’t join Happy Joe’s until October 2020. He was tasked with finding problems within the company.

“The good news is that we are revitalizing the Happy Joe’s brand, remodeling older restaurants, opening new highly successful franchises and entering new markets in Florida, Texas and Arizona, along with our international expansion in Egypt and throughout the Middle East. “, Thomas Sacco says in the press release. “All of this is contributing to a stronger and healthier business model that will be significantly more profitable in the future.”

In July, Happy Joe’s announced that it would open several new locations in Africa and the Middle East this year. In August, two franchise locations in eastern Iowa closed due to personnel problems.

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What does Chapter 11 bankruptcy mean?

Chapter 11 bankruptcy is commonly known as a “reorganization” bankruptcy, depending on the Administrative Office of the US Courts. It does not necessarily mean that a company will cease to exist.

The process begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile, residence, or principal place of business. In the case of Happy Joe, the debtors are located in Delaware: HJ Dynamic Holdings, LLC, TS Dynamic Acquisition, Inc. and TS Dynamic Holdings, LLC.

According to Nolo, an online legal encyclopedia, all chapters of bankruptcy work by stopping the collection process, which prevents most creditors from going after the filer. That gives the filer, creditors, and the court more room to approach the finances in an organized manner.

Things like payment requests, evictions or foreclosures are temporarily stopped.

Under Chapter 11, the filer still has control over the business. Payment plans are created to help the company get out of the debt it has accumulated. Nolo’s website says that most plans require a reduction in the debtor’s operations to reduce expenses and free up assets.

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