U.S. Division of Maison Kayser Files for Bankruptcy With Offer From Aurify
Bakery chain’s U.S. operator says business has been devastated by Covid-19 related closures; Aurify plans to convert locations to other restaurants
The U.S. operator of French bakery chain Maison Kayser has filed for bankruptcy with a plan to sell its New York City locations to an affiliate of restaurant operator Aurify Brands LLC, subject to better offers at auction.
The operator, Cosmoledo LLC, and its affiliates filed for chapter 11 protection Thursday in the U.S. Bankruptcy Court in New York shortly after notifying the Labor Department that it was laying off more than 700 employees that had been furloughed because of the coronavirus pandemic. Cosmoledo had operated 16 Maison Kayser locations in New York.
Aurify’s offer could be valued at as much as $10 million, according to a person familiar with the matter.
If the deal goes through, Aurify doesn’t intend to continue operating Maison Kayser but would instead take over the bakery’s former locations to expand its other chains, according to people familiar with the matter.
New York-based Aurify operates restaurant brands including the Little Beet, Melt Shop, Fields Good Chicken as well as Five Guys franchises.
The company in May agreed to buy the U.S. division of Belgium-based bakery chain Le Pain Quotidien out of bankruptcy.
Baker Eric Kayser opened the first Maison Kayser in Paris in 1996, according to the bakery chain’s website, and the chain opened its first location in New York City in 2012.
Maison Kayser’s U.S. bankruptcy highlights the financial struggles New York City’s restaurant industry has faced during the pandemic as a number of prominent bars and eateries have closed permanently.
“Many long-standing pillars of the industry have closed for good,” Cosmoledo Chief Executive José Alcalay said in a declaration filed in court. Mr. Alcalay said Maison Kayser’s business “was devastated by the global Covid-19 pandemic,” which came around the time the company was completing a restructuring of its operations.
Management initially thought Maison Kayser would reopen in June and got a $6.6 million loan under the federal Paycheck Protection Program, a financial lifeline intended to cover employee wages and avoid layoffs. But Mr. Alcalay said it became clear that the bakery couldn’t afford to keep operating under New York City’s phased reopening plan, with the loss of revenue from in-store dining and the cost of continuing takeout and delivery service.
The company didn’t use most of the PPP loan and it has sufficient money to repay it, court papers say. The government loans don’t have to be repaid if they are used primarily to avoid layoffs.
Cosmoledo, which owes more than $72.7 million in secured debt, began exploring restructuring alternatives in July and marketed its assets months before filing for chapter 11 protection. An affiliate of Aurify Brands acquired some of Cosmoledo’s senior debt before the bakery filed for bankruptcy and could use that as currency at auction to acquire Maison Kayser’s assets, court papers say.
Aurify’s offer for Maison Kayser’s assets is in the form of a stalking-horse bid, which will set the floor on a sale price for the business.
The total value of the bid is about $8.4 million, including the forgiveness of $5.4 million in debt as well as $3 million cash and the assumption of liabilities, according to the person familiar with the matter. The offer could rise in value to as much as $10 million if bid protections are approved by the bankruptcy court, this person said.
The offer is subject to competing bids. Any proposed sale of Maison Kayser’s assets must be approved by a bankruptcy judge.
U.S. Bankruptcy Judge Michael Wiles has been assigned to Cosmoledo’s case, number 20-12117. Law firm Mintz & Gold LLP is Cosmoledo’s legal counsel.