NPC International, the largest franchisee in the United States for Pizza Hut, filed for Chapter 11 bankruptcy on Wednesday, CNN Business reports. The franchisee also owns almost 400 Wendy’s locations.
The owner of more than 1,200 Pizza Hut restaurants and 385 Wendy’s Co. stores was expected to file for chapter 11 protection as soon as Tuesday, June 30, according to people familiar with the company’s finances.
The franchisee missed interest payments on its nearly $800 million in loans on Jan. 31, prompting S&P Global Ratings and Moody’s Investors Service to lower their views on the company’s debt. NPC was in conversations with its lenders for a possible bankruptcy filing at that time, people familiar with the matter said.
In August, Pizza Hut announced plans to close as many as 500 dine-in locations, specifically seeking out the places that have been underperforming, and transitioning those spots into the company’s long-term vision of a strictly delivery and carryout operation.
“Although Pizza Hut has recently communicated its commitment to orchestrate a brand turnaround and to reinvigorate interest in the brand, over the past several years these factors have worked together to strain the financial performance of (NPC) and have restricted and limited its ability to operate profitably under its current balance sheet,” Koza said in the filing.
NPC’s five largest unsecured creditors are:
Pizza Hut Inc., Plano, Texas: $17.6 million
The Wendy’s Co., Dublin, Ohio: $8.9 million
Sygma Missouri, Columbus, Ohio: $7.4 million
I.P.H.F.H.A. Inc., Wichita, Kansas: $3.8 million
McClane, Carrollton, Texas: $1.4 million
In a statement, Pizza Hut, which is owned by Louisville, Kentucky-based Yum Brands Inc. (NYSE: YUM), said it expected NPC’s filing and views it as an “opportunity to create a better future for NPC’s Pizza Hut restaurants.”