This story has been updated to include a statement from Friendly Ice Cream Corp.
A report from The Wall Street Journal Thursday said Friendly Ice Cream Corp., the parent to the 500-unit Friendly’s family-dining chain, could seek Chapter 11 bankruptcy protection as early as next week, and hold an auction to sell the chain.
The report cited “people familiar with the matter,” and reported that Wells Fargo & Co. is in talks to provide Friendly Ice Cream with about $70 million in financing to remain afloat during bankruptcy proceedings.
Wilbraham, Mass.-based Friendly Ice Cream said it does not comment on rumors in the media or marketplace.
“Like many restaurant chains, we are feeling the impact of the economic downturn and rising commodity prices and a challenging marketplace,” the spokesperson said in a statement sent to Nation’s Restaurant News. “We are working with our lenders, board and management team to explore alternatives to strengthen our financial base.”
Nation’s Restaurant News also contacted Friendly's private-equity owner, Boca Raton, Fla.-based Sun Capital Partners, but did not reach officials for comment.
Sun Capital owns 10 restaurant brands, including Boston Market, Smokey Bones Bar & Fire Grill and Fazoli’s. Another holding, Real Mex Restaurants, which operates the Chevys, El Torito and Acapulco brands, is in the midst of a financial restructuring.
The number of restaurant bankruptcies continues to increase as companies try to navigate slowed sales, higher costs and toppling levels of debt. Most recently Sbarro Inc., Perkins & Marie Callender’s and Pat & Oscars each filed for Chapter 11 bankruptcy.