The Friendly’s restaurant chain is preparing for a possible Chapter 11 bankruptcy filing and potential sale, said people familiar with the matter.
Friendly Ice Cream Corp., which employs roughly 10,000 people and operates more than 500 restaurants known for sundaes and hamburgers, could seek protection from creditors as soon as next week, the people said. The Wilbraham, Mass.-based company would then try to sell itself through a bankruptcy auction, the people said.
Friendly’s is in talks with Wells Fargo & Co. for about $70 million in so-called debtor-in-possession financing that would keep it afloat during bankruptcy proceedings, the people said. The bankruptcy financing would consist of about $25 million in new funds and other existing debt that would “roll up” into the new loan, the people said. Wells Fargo declined to comment.