3 August 2004
Schlotzsky’s Files For Bankruptcy
Posted by Zane under: News .
Schlotzsky’s Inc., a delicatessen franchiser with more than 500 outlets in 36 states and six countries, filed for protection from its creditors under Chapter 11 of the federal bankruptcy laws on Tuesday.Schlotzsky’s said operations at its 513 shops would continue normally during the financial restructuring. It owns 21 shops itself while franchisees own the balance.
Austin-based Schlotzsky’s cut 20 percent of its corporate staff and closed 15 corporate-operated shops in July.
The deli company reported a net loss of $11.7 million in 2003 versus a loss of $199,000 in 2002. It lost another $671,000 in the first quarter of 2004.
“It became apparent to our board that this action was necessary to protect Schlotzsky’s from millions of dollars in claims, judgments, and debts accumulated during the past few years, while enabling us to restructure the company,” Sam Coats, Schlotzsky’s president and CEO, said after the filing was made in U.S. Bankruptcy Court in San Antonio.
“I believe the actions taken by the board took great courage and are clearly in the best interest of the company,” Coats said.
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