Thursday, 30 June 2011

Elephant & Castle, a Boston-based chain of 21 British-style pubs, has filed for Chapter 11 bankruptcy protection after struggling through the recession and defaulting on its loans.

The restaurant company, which employs 866 people, said it is has been seeking a possible sale since April to keep the chain alive.

“Those efforts resulted in the identification of a number of interested parties,” David Dobbin, the company’s chairman, said in a filing in U.S. Bankruptcy Court. “Due diligence is ongoing with several potential purchasers and expressions of interested parties.”

Elephant & Castle, founded in 1977, has 19 company-owned and two franchised locations in major cities in the U.S. and Canada, including a pub in Boston’s Financial District.

The company said it owes more than $16 million to its lender, GE Canada Equipment Financing.

Dobbin noted that Elephant & Castle was hurt by a downturn in sales during the recession, prompting cost-cutting at the corporate level and at its restaurants.

“These moves helped, but the company continued to have negative cash flow after required debt service,” he said, adding that he poured $5 million from his own holding company to help the chain.



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