Mrs. Fields Famous Brands LLC, the cookie and frozen-yogurt company based in Salt Lake City, has filed for bankruptcy, with a plan that will allow it to cut debt by $145 million and keep stores open for the holiday season.
The company plans to emerge from its Chapter 11 prepackaged bankruptcy, filed in U.S. Bankruptcy Court in Delaware, within 45 days, according to a Mrs. Fields news release Sunday.
Under the plan, the company, which also owns TCBY Enterprises Inc., will exchange about $195 million in bondholder debt for cash, new bonds and a controlling equity stake in the reorganized company, the statement said.
"We see the filing of the prepackaged bankruptcy as a largely administrative matter, since the bondholders holding the majority of our bonds have already agreed to the restructuring," said Co-Chief Executive Officers Michael Ward and John Lauck in the statement.
In a prepackaged bankruptcy, creditors vote on terms of the reorganization before the actual bankruptcy filing, allowing the company to emerge from Chapter 11 more quickly. Creditors must vote by Sept. 15.
Lindenmeyr Central is the company's largest creditor at $451,785, followed by Creative Resources, with $428,976, and United Parcel Service Inc., at $160,908, according to the list of 20 largest unsecured claims which amount to more than $1.5 million, according to the bankruptcy filing.
Unsecured creditors would be paid in full under the proposal, while equity holders would get nothing.
Mrs. Fields Cookies offers fresh-baked specialty cookies and brownies, while its TCBY stores sell soft-serve frozen yogurt. The company has 1,268 franchised and licensed locations in the United States and 21 other countries, mainly in shopping malls, the company said in court filings.
The first Mrs. Fields cookie store was opened by Debbi Fields in Palo, Alto, California, in 1977, the company said on it Web site. She began franchising in 1990.