Cosmoledo files bankruptcy, inks stalking horse cash/credit bid deal

By Caroline Salls

Pittsburgh, Sept. 11 – Cosmoledo, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of New York.

Chief executive officer Jose Alcalay said in a statement filed with the court that “there is still little prospect of in-store dining any time soon” as a result of measures addressing the Covid-19 pandemic.

“After analyzing the financial impact stemming from the macro-economic factors impacting the restaurant industry, of the loss of in-store dining revenue and the continued overhead required to sustain even limited operations (take-out and delivery), the company determined that there was too great a risk that future operations would fail to generate sufficient capital to repay its obligations in the ordinary court of its business and continue profitable operations,” Alcalay said.

As a result, the CEO said Cosmoledo decided not to reopen its stores and began exploring its restructuring alternatives in mid-July.

Alcalay said Cosmoledo has entered into a stalking horse purchase agreement under which MK USA, LLC agreed to buy all or substantially all of the company’s assets for $3 million in cash and the value of a credit bid of its secured debt.

If MK USA is not ultimately the winning bidder for the assets, Cosmoledo will pay it a 3% break-up fee and reimburse its sale-related expenses.

Competing bids are due by noon ET on Sept. 24 and must at least equal the total purchase price under the stalking horse bid, plus the amount of the break-up fee and expense reimbursement and a $75,000 overbid amount.

The auction will be held on or before Sept. 29. Bids at auction must be made in minimum increments of $50,000.

The company believes it has sufficient funds on hand to administer the Chapter 11 cases, run the sale process, complete a sale and file a confirmable plan based on current forecasts, Alcalay said. Cosmoledo is seeking court approval to use cash collateral on a consensual basis to ensure this remains the case.

According to court documents, Cosmoledo has $10 million to $50 million in assets and $50 million to $100 million in debt.

The company’s largest unsecured creditor is Santander Bank NA of Reading, Pa., with a $6.66 million loan claim. No other unsecured creditors were listed with claims of $1 million or more.

Mintz & Gold, LLP is representing Cosmoledo in its Chapter 11 proceedings.

New York-based Cosmoledo operates fine casual dining restaurants. Its Chapter 11 case number is 20-12117.

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