If you and your family have a hard time agreeing on which type of pizza to order, you may have been to Mod Pizza before. Mod Pizza is a Seattle-based restaurant chain that allows customers to order personal pizzas with any sauce, cheese, and toppings that their hearts desire. Mod Pizza focuses on not just letting customers order customized pizza, but social causes like hiring people with disabilities and who have been previously incarcerated, and efforts in other areas like child hunger and mental health awareness. The chain was founded in 2008 and had 553 locations across the United States in 2023. It also received $160 million in funding from private equity company Clayton Dubilier & Rice, promising to expand to 1,000 locations and create 14,000 new jobs. However, things began to go South for Mod Pizza in 2024. The company appointed a new CEO and closed 26 underperforming store locations. The company also appointed a new chief marketing officer in April 2024.
While a Mod Pizza can be as unique as the customer wants it to be, it isn’t the only customized pizza option on the market. Other custom pizza options include Pieology, Blaze, and Fired Pie. In addition to having nearly-identical competition, restaurants of all types have been struggling to adjust to the post-pandemic economy. The cost of living has shot up, so less people are going out to eat. Fast casual chains like Mod Pizza have been feeling the squeeze as many diners would rather eat at higher-end restaurants on special occasions than spend their limited budget on fast casual meals. There have been recent bankruptcy filings from major restaurant chains like Red Lobster and Rubio’s Coastal Grill.
Mod Pizza has retained law firm Latham & Watkins, investment bank Miller Buckfire, and financial advisor Hilco Global to help it decide how to ease its financial woes. This is usually a sign that a company is about to file for bankruptcy, or at least considering it. Sometimes, a company can avoid bankruptcy by finding a buyer willing to take on the risks and debt of a struggling restaurant. Bankruptcy can also be used to protect the company’s assets while matters are resolved, even if the end result is the chain selling to a buyer. If this happens, it could keep restaurant locations open and save jobs, especially for vulnerable employees.
Bankruptcy is never an easy decision, whether you’re considering filing a corporate bankruptcy as a business owner or a personal bankruptcy to clear your debts. If you are considering filing for chapter 7 or chapter 13 bankruptcy in Phoenix or Tucson, Arizona, our firm can assist you with the process. Read on to learn more about bankruptcy, and if you have additional questions, contact our office at 602-609-7000 to schedule your free consultation.
Corporate Bankruptcy Options
If Mod Pizza files for bankruptcy, it will likely follow in its restaurant predecessors’ footsteps and file for chapter 11 bankruptcy. Many businesses file this type of bankruptcy because it doesn’t require a business to shut down like filing chapter 7 bankruptcy would. Its key feature is the creditor committee. In chapter 11 bankruptcy, the debtor’s top creditors choose representatives that help oversee the bankruptcy and vote on issues throughout the process. For example, if a business wanted to shut down half of its locations during its bankruptcy case, the creditor committee would need to vote on whether they agree on this resolution. Lower-level management decisions are not in the creditor committee’s jurisdiction. Small businesses with less than $7.5 million in debt can qualify to use small business provisions, which allow them to skip the formulation of creditor committees.
Chapter 7 bankruptcy liquidates debts, which means that a business that uses it for debt relief must also be liquidated. There may be benefits from the automatic stay and clearing unsecured debts that can help a company, even if intends to shut down operations. Chapter 13 bankruptcy is another common type of consumer bankruptcy, but is for the most part not available to business debtors as a bankruptcy option. Looking to learn more about these different options as either a small business owner or a consumer? Our Tucson and Phoenix bankruptcy lawyers know just how to help our clients navigate their debt relief options and identify potential issues in their cases. Call 602-609-7000 to schedule your free consultation today.
How Does The Automatic Stay Help Bankruptcy Debtors?
If and when Mod Pizza declares bankruptcy, part of its motive will be to activate the automatic stay. The automatic stay is a defining feature of bankruptcy that provides vast protections to debtors whose cases are waiting to be resolved. Creditors are no longer allowed to harass debtors or pursue them for repayment while the automatic stay is in place. Some of the actions that the automatic stay stops include:
- Lawsuits against the debtor
- Wage garnishments
- Vehicle repossessions
- Bank account levies
- Home foreclosures
- Creditor calls
- Utility shutoffs
As you can see, these benefits would be invaluable to a person or company struggling with debts. For example, if a person fell behind on their car payments and their vehicle was repossessed, they might have lost a reliable way to get to work. Public transportation could make them regularly late to work until they lost their job. Stopping a repossession through bankruptcy could stop that chain of events from occurring.
There are several reasons that a debtor could lose protection from the automatic stay. The automatic stay generally lasts as long as the case does, which is a set 3 or 5 years for chapter 13 bankruptcy, but only about 3 to 6 months for chapter 7 bankruptcy. If a debtor fails to resolve non-dischargeable debts during that time, the creditor can simply wait for the case to be discharged before proceeding with collection. Some debtors won’t have protection throughout their whole case due to an exploding stay, which happens if a debtor has to file their petition more than once in a 12-month period. A creditor can also request to proceed with debt collection, even with a valid automatic stay in place, with a motion for relief from the automatic stay. A debtor should prepare a vigorous argument if any of their creditors challenge the protections from their automatic stay. Learn more about that process with your free consultation with a member of our Arizona bankruptcy team- call 602-609-7000 to get started today.
Free Consultations & Zero Down Payment Options For Arizona Debtors Considering Bankruptcy
Mod Pizza ignited bankruptcy rumors by retaining an entire team to advise it through the process. At My AZ Lawyers, we aim to be your one-stop shop for all issues related to bankruptcy cases filed in Phoenix and Tucson. Our Bankruptcy Lawyers of Arizona is experienced in helping Arizona families get out of debt and get on with their lives. Eligible clients can file using our Zero Down payment option, which means paying for your bankruptcy case after it has been filed in affordable monthly installments. Learn more about what our firm has to offer today by scheduling your free consultation today- call 602-609-7000 to get started. Contact us!
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