AUSTIN, Texas — Mom and pop restaurants have been hit hard by the pandemic, but one Texas lawyer said more big chain restaurants are filing for bankruptcy as the pandemic continues.
"California Pizza Kitchen, Pizza Hut, Wendy's, Chuck E. Cheese, a lot of well-known restaurants are struggling and have already declared bankruptcy," said Allmand Law firm bankruptcy attorney Reed Allmand.
Allmand said the number of businesses that filed for bankruptcy this summer was up by almost 200% compared to last year, but that doesn't always mean the business is gone for good.
"They may be looking to try to position the business to be marketable, to be sold, so maybe they can find a buyer who's going to come and pay off the debt," said Allmand. "Then the new buyer will be able to restructure and continue to operate. Also they may be pursuing options just to liquidate."
We see that happening now with Texas's beloved Luby's restaurant. Board members announced last month they are liquidating all its assets with a plan to sell the company and divide the money among shareholders.
As for the everyday consumer, Allmand said bankruptcy filings are down but that can quickly change if eviction moratoriums are removed.
"I think that there's a lot of consumers who are behind on the rent who have been able to hang on because of these moratoriums for rent and delays on evictions," said Allman. "But there's also a groundswell out there that when those restrictions are removed, I think we're going to see a lot of consumer cases filing bankruptcy as well."
Allmand said until more people are comfortable eating at restaurants, he predicts there will continue to be more businesses filing for bankruptcy.
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