Dairy Queen Franchise owner Vasari LLC, based in Irving, Texas, announced this week that it would be filling for Chapter 11 bankruptcy protection and closing nearly 30 stores as a result of the bankruptcy restructuring. The affected Ice Cream and Fast Food restaurants are located across Texas, New Mexico, and Oklahoma. The parent company of those Dairy Queen stores, Vasari LLC, lists over 70 locations on their corporate website, but many of the more profitable stores will remain open.
Chapter 11 Bankruptcy Court Filings
According to bankruptcy filing for the Chapter 11 restructuring, Vasari LLC lists it’s debt between $10 and $50 million, and owns assets totaling in the same range. The company also stated that the Chapter 11 would provide enough money to pay its unsecured creditors and allow the company to remain in business as it reorganizes its debt. An emergency motion filed in the bankruptcy case stated that the company “has identified its underperforming restaurants and will use the breathing spell provided by the filing of this bankruptcy case to continue to analyze those locations, their profitability and potential remedies”. The motion in Texas bankruptcy court also mentions Hurricane Harvey as a major factor in deciding to file bankruptcy.
Vasari LLC was very deliberate in their statement that the remaining 45 Dairy Queen chains would remain open for business but will be closely monitored. Like many chain restaurants filing bankruptcy over the previous 24 months, by closing the less profitable stores, the business can actually strengthen its balance sheet and emerge from Chapter 11 in a much more healthy state of affairs. In a statement from Vasari’s President and CEO, “this decision was based solely on what’s best to have a healthy company and ensure the long-term success of our core restaurants for our customers, employees, and other stakeholders.”
According to the company, the move to restructure under Chapter 11 bankruptcy protection will allow them to protect nearly 700 jobs at its remaining restaurants. For those employees affected by store closing, full pay for time worked and access to human resources for career counseling are being provided.