Friendly's bankruptcy rumor sizzles

Wednesday October 5, 2011

While it's business as usual at Friendly's restaurants, at least for now, the company is reported to be poised on the brink of filing for bankruptcy protection as tastes change and competition mushrooms.

Revenues have been on a steady downhill slope in recent years, but the regional chain with more than 500 locations and 10,000 employees retains many loyal customers who grew up on the ice cream and sandwiches. They remain nostalgic about the Wilbraham-based company that has fallen on hard times with a reported $200 million in debts.

In the Berkshires, Friendly's operates restaurants in Lee, Lenox, North Adams, Pittsfield and Great Barrington.

At the Great Barrington location which opened in November 1965, Wayne Soldati, 55, who grew up in the town, said he's "very disappointed" about the chain's fierce financial headwinds.

A San Francisco resident for the past 25 years, Soldati still patronizes Friendly's when he returns to visit his family.

"I've always loved Friendly's and make it a point to come here for my favorite vanilla milk shake and Fishamajig sandwich," he said. "I have nothing but fond memories so the news is disturbing and it saddens me."

Soldati mentioned past problems with service that "turned a lot of people off."

Awaiting an interview with the manager for a position as a waitress, Colleen Nowobilski of Great Barrington said she has been especially fond of the Fribble milk shake and indicated she's hopeful that she can land the job despite the company's setbacks.

The Friendly Ice Cream Corp. has gone through a revolving door of owners and corporate shakeups since the 1980s.

The weak economy has taken a big bite out of many restaurant-chain revenues, and higher prices for basic food supplies are hurting the bottom line.

"Friendly's has a policy of not commenting on rumors in the media or marketplace," according to spokeswoman Lynn Bolton at the Wilbraham headquarters.

"Like many restaurant chains, we are feeling the impact of the economic downturn, 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."

Reported options include a possible sale or a Chapter 11 bankruptcy filing. The company is seeking $70 million in financing from Wells, Fargo & Co. to tide it over, according to the Wall Street Journal.

"On the face of it, they're a good candidate for using Chapter 11 to either sell the company or restructure it without selling," said attorney Jesse Cook-Dubin, a business bankruptcy specialist with Cohen, Kinne, Valicenti and Cook in Pittsfield.

He pointed out that over the past decade, a Chapter 11 filing has been used more frequently to sell financially-distressed companies.

But, emphasizing he has no direct knowledge of Friendly's circumstances, Cook-Dubin explained that unless the company has a sale pending before going into bankruptcy, "it's a treacherous landscape, especially for the folks who work there. It's life in a fishbowl since their jobs are on the line."

Founded by brothers Prestley and Curtis Blake in 1935 during the Great Depression as a small group of ice cream shops, more recent owners have included Hershey Food Corp. and since 2007, a Florida private-equity firm, Sun Capital Partners Inc.

The chain has been a fixture in New England, reaching the height of its popularity after World War II when competition was limited.

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