• Le Pain Quotidien hopes a sale to Aurify will permit at least 35 of its 98 U.S. restaurants to reopen
  • Le Pain Quotidien has more than $100 million in debt
  • About 56% of its sales from the New York City area alone

Casual restaurant chain and bakery Le Pain Quotidien has filed for Chapter 11 bankruptcy protection and said it plans to sell itself to New York-based Aurify Brands in a bid to keep some of its restaurant locales open.

According to a court filing, Le Pain Quotidien hopes that such a sale – valued at $3 million -- will permit at least 35 of its 98 U.S. restaurants to reopen. The remaining locales will likely close permanently.

Le Pain Quotidien is also on the hook for more than $100 million in debt.

Aurify operates The Little Beet, Melt Shop and Fields Good Chicken restaurants. In early May, Aurify successfully secured Le Pain Quotidien’s U.S. franchising rights.

Le Pain Quotidien has locations in New York City, the Mid-Atlantic region, California, Illinois and Florida. Prior the pandemic, the franchise generated about 56% of its sales from the New York City area alone – a city saturated with dining establishments.

Le Pain Quotidien’s chief restructuring officer Steven Fleming noted in the filing that the chain had planned to file for bankruptcy even before the emergence of the coronavirus pandemic as it was already struggling to compete with its rivals and joined the digital ordering revolution too late.

The chain endured “eroding” same-store sales, expensive leases and underperforming stores. Fleming added that "a lack of investment" prevented the company for competing with its peers especially in digital technology.

The company reported $153 million in sales in 2019, but negative-$16.8 million in earnings before interest, taxes, depreciation and amortization.

Fleming said the pandemic brought the chain to the brink of collapse. A brief attempt to solely offer takeout service failed as the company was "ill-equipped to deal with the significant decline in traffic and takeout/delivery-only model.” As a result, the chain closed all of its U.S. sites.

If the sale to Aurify is completed, Le Pain Quotidien workforce will plunge from pre-pandemic level of 2,500 to about 1,000.

While "the debtors [Le Pain Quotidien] were forced to shutter all locations and terminate substantially all of their employees due primarily to the circumstances surrounding the COVID-19 pandemic," the "Chapter 11 cases represent a new, brighter day for the debtors' constituents," Fleming said.

"The sale enables the debtors to avoid what otherwise would have been a complete liquidation under Chapter 7 of the bankruptcy code, thereby maintaining a go-forward business partner and tenant for many of the debtors' vendors and landlords, respectively," Fleming added.

Le Pain Quotidien’s parent was founded in Belgium in 1990 and first opened locations in the U.S. seven years later. At its peak, the company had more than 290 outlets globally.

Le Pain Quotidien's Belgian parent is itself involved in an insolvency case filed in a Belgian court last week.

Two Brussels-based investment firms have made a “binding and unqualified bid” for the Belgian Le Pain Quotidien, which disposed all of its British and American subsidiaries.

The British operation has since entered into administration.