A popular restaurant in Ohio now files a surprising bankruptcy after disclosing liabilities between $1 million and $10 million.
Melt Bar and Grill has filed for bankruptcy in the U.S. Bankruptcy Court for the Northern District of Ohio.
The restaurant disclosed that it had assets between $500,001 and $1 million with liabilities between $1 million and $10 million.
Judge Alan M. Koschik, who is overseeing the bankruptcy, “granted an emergency order in the case on June 21, which will allow the chain to pay $100,000 in “wages, salaries and employee benefits” through a KeyBank payroll account, as well as reimburse employee business expenses from the pay period through June 14.
But the order also blocks Melt from paying “severance, vacation pay or bonuses” without additional action from the judge,” NBC 4 Ohio reported.
The order enables the chain to keep operating while it negotiates with its creditors, reports TheStreet.
Koschik scheduled a status conference in the bankruptcy case for Aug. 6.
He gave all of Melt’s creditors, excluding government agencies, a deadline of Aug. 27 to file claims on Melt’s assets, according to the news website.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.
Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.
Supply Source brands include The Safety Zone and Impact Products.
The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.
Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.
Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products
The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.
However, the company’s financial performance deteriorated in subsequent years.
Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.
The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.
In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.
Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.
The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.
The excess inventory forced the debtor to secure additional storage space, which increased storage costs.
These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.
The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.
The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.
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Also Read: This Massive Mall Retailer Is Now Closing In California
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