Happy Joe President and CEO Thomas A. Sacco signed the voluntary petition filed Sept. 2.
WILMINGTON, Del. — Bettendorf-based restaurant chain Happy Joe’s Pizza has filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the District of Delaware.
Happy Joe President and CEO Thomas A. Sacco signed the voluntary petition filed Sept. 2, the same day the company’s public relations firm sent an email saying the company “is transforming into a revitalized and modern business model”.
“The vast majority of Happy Joe’s 50+ locations are highly profitable, with its franchise restaurants leading the way having either recently been renovated or transitioning to the brand’s new modern design, resulting in higher customer satisfaction” , the statement said.
In this press release, the pizza chain boasts that it has signed more franchise contracts and opened new establishments in the past 18 months than in the previous decade. He also announces the filing for bankruptcy, however, he never utters the word “bankruptcy”.
The press release indicates that Thomas Sacco “has filed a reorganization plan on two of the four corporate entities”.
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The first entity is the one that operates the company restaurants while the second operates the Tony Sacco restaurants. Tony Sacco and Thomas Sacco are not related, according to the statement.
“Both entities operate only company-owned restaurants and are not associated with any franchise restaurants,” the statement said. “The two franchising entities – Happy Joe’s Franchising and Tony Sacco’s Franchising – were not part of the case.”
Thomas Sacco only joined Happy Joe’s in October 2020. He was tasked with finding trouble within the company.
“The good news is that we are reinvigorating the Happy Joe’s brand, transforming older restaurants, opening highly successful new franchises and entering new markets in Florida, Texas and Arizona – alongside our international expansion into Egypt and throughout the Middle East,” Thomas Sacco said in the press release. “All of this contributes to a stronger and healthier business model that will be much more profitable in the future.”
In July, Happy Joe’s announced the opening of several new locations in Africa and the Middle East this year. In August, two franchises in eastern Iowa closed due to staffing issues.
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What does chapter 11 bankruptcy mean?
Chapter 11 bankruptcy is commonly referred to as “reorganization” bankruptcy, according to the US Courts Administrative Office. This does not necessarily mean that a business will cease to exist.
The process begins with filing a petition with the bankruptcy court in the jurisdiction where the debtor has a domicile, residence or principal place of business. In the case of Happy Joe, the debtors are based in Delaware: HJ Dynamic Holdings, LLC, TS Dynamic Acquisition, Inc. and TS Dynamic Holdings, LLC.
According to Nolo, an online legal encyclopedia, all chapters of bankruptcy work by interrupting the collection process, which prevents most creditors from suing the filer. This gives the filer, creditors and the court more leeway to manage the finances in an organized way.
Things like payment requests, evictions or foreclosures stop temporarily.
Under Chapter 11, the filer still has control of the business. Payment plans are created to help the company get out of the debt it has accumulated. The Nolo website indicates that most plans require some reduction in debtor operations to reduce expenses and free up assets.
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