Fast-food chain facing Chapter 11 bankruptcy gets more bad news

When a company runs out of cash it has to. make sacrifices. For a retailer, mean cutting inventory, operating with fewer workers, and pushing off paying bills.

Within the restaurant world, on the opposite hand, it truly is tougher to chop expenses. A burger chain cannot stop selling fries to save cash and decreasing on workers will quickly lead to customers having a foul experience.

Related: Renowned fast-food chain surprisingly closing more than one restaurants

A struggling fast-food chain that has run low on cash has very few options. It truly is in a position to chop back on back place of job expenses, but for a public company, that creates a whole new set of problems. The SEC does now now not take kindly to companies missing filing closing dates.

It also includes unforgiving when a public company falls out of compliance with its rules and has very little leeway sooner than the corporate gets delisted.

For BurgerFi International (BFI) , its Nasdaq compliance woes simply compound its problems as the corporate has already defaulted on loans from a lender that will want to take the brand over.

It truly is a foul situation that just got worse, and the corporate, which warned on August 20 that it became taking into account a financial disaster filing, appears a lot closer to being forced to file for Chapter eleven financial disaster protection.

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BurgerFi faces Nasdaq delisting

BurgerFi operates its namesake brand to boot as Anthony's Coal Fired Pizza and Wings. It currently has 102 franchised and corporate-owned BurgerFi locations, and  fifty 9 corporate-owned and one franchised Anthony's Coal Fired locations.

The corporate has received deficiency notices from the Nasdaq stock exchange related to its failure to timely file its Quarterly Report on Form 10-Q for the quarter ended July 1, 2024, and the composition of Board committees springing up from the resignation of directors.

"On August 27, 2024, Nasdaq provided formal notice to the corporate that by reason of the corporate’s failure to timely file its Q2 Form 10-Q, the corporate does now now not adjust to the ongoing listing requirements lower than the timely filing criteria outlined in Nasdaq Listing Rule 5250(c)(1). Also on August 27, 2024, Nasdaq provided formal notice to the Company that by reason of the resignations of certain members of the corporate’s Board of Directors, the corporate does now now not adjust to Nasdaq’s audit committee and compensation committee requirements set forth in Nasdaq Listing Rule 5605," per a BurgerFi press release.

BurgerFi has 60 days to file its missing forms and 45 days to submit a plan to fix its board of directors to have the capacity to Nasdaq'a audit committee and compensation committee requirements.

If the corporate does now now not meet those requirements, it needs to be delisted from the stock exchange.

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BurgerFi faces Chapter eleven financial disaster

In May, BurgerFi management shared that it had formed a different committee of Directors and retained Kroll Securities, LLC  as its exclusive financial advisor to beef up an ongoing evaluation of strategic choices.

On the time, it warned that its actions may now now not lead to a solution that allowed the corporate to continue operating lower than its current management.

"We are committed to taking into account all potential strategic choices. While we're confident within the Company's current operating strategy, we're mindful of the corporate’s current liquidity challenges and are committed to exploring strategic choices that we have gotten faith would be within the suitable interests of the corporate and its stakeholders," said David Heidecorn, a member of the Board of Directors.

On the time, the corporate also entered into a forbearance agreement for its credit line with TREW Capital.

More financial disaster stories:

• Another popular ice cream brand files for Chapter eleven financial disaster
• Renowned burger chain faces likely Chapter eleven financial disaster
• Huge shipping company files Chapter eleven financial disaster to liquidate

"TREW makes a speciality of distressed legendary brands, and brands with a proven business model, but require additional resources for growth," per its web page online.

Regularly, TREW loans struggling restaurant brands money and takes them over if they may't fix their operations on their own.

BurgerFi has already warned that there's substantial doubt about the corporate's ability to continue operating as a going concern.

A Chapter eleven financial disaster filing would put TREW in a strong position to take over the corporate.