According to a report by the Wall Street Journal, Friendly's Family Restaurants may be joining Borders, Linens & Things and Blockbuster in the list of chain companies that have filed for bankruptcy protection.
The Journal reports that the Chapter 11 filing could happen as early as next week and the company has applied for a $70 million loan with Wells Fargo to bridge the process.
The corporate offices of Friendly's or its parent company, Sun Capital Partners, Inc., have neither confirmed nor denied the report. In a statement to Reuters News, a spokesperson from Friendly's said, "Like many restaurant chains, we are feeling the impact of the economic downturn and rising commodity prices and a challenging marketplace. We are working with our lenders, board and management team to explore alternatives to strengthen our financial base."
According to the Wall Street Journal, Friendly's would roll some of its debt into the Wells Fargo loan, then auction itself out of bankruptcy. No word on whether any branches would close as a result of the filing. When Bennigan's filed for Chapter 7 bankruptcy protection in 2008, it closed 150 of the corporate-owned restaurants, but the 138 franchises remained open.
Brothers Priestly and Curtis Blake opened the first Friendly's restaurant in Springfield, Mass., in 1935, selling double dip ice cream cones for five cents apiece. Since then, it has grown to more than 500 locations along the East Coast, including restaurants in , , , , and Langhorne.