Upscale restaurant group King Street secures creditor protection
The COVID-19 pandemic has forced one of Toronto’s buzziest restaurant groups into creditor protection. King Street Company Inc. announced Monday it secured Companies' Creditors Arrangement Act (CCAA) protection as it reels from the impact of dine-in eating restrictions.
In a release, King Street Company managing director Peter Tsebelis said the pandemic essentially forced the company into a corner, prompting it to seek creditor protection.
"Alongside the entire hospitality sector, the COVID-19 pandemic has put us in an extremely difficult situation that was beyond our control," he said.
“This was an emotional decision for us but we are confident that the CCAA process will give us time to stabilize our business and ultimately put us in a stronger position to build on our successful brands as we emerge from the COVID crisis."
The company, founded in 2006, operates a slate of restaurants in Toronto, including the critically-acclaimed Italian restaurant Buca, helmed by star chef Rob Gentile. Buca was launched in 2009, and King Street now has five restaurants in its portfolio. The company had plans to add more locations before the pandemic upended the restaurant and hospitality industry.
The depth of the damage to King Street’s operating model was laid bare in the company’s CCAA filing. Over the course of the March to October period, revenue plunged 98 per cent year-over-year, and the company reported $1-million in negative earnings before interest, taxes, depreciation and amortization.
King Street also furloughed 462 employees, keeping only staff essential to head office operations and its limited delivery operations. Before the pandemic hit, the company employed approximately 511 workers. King Street said in its filing that it had availed government supports, including the Canada Emergency Wage Subsidy Program, the Canada Emergency Business Account Program and the Canada Emergency Commercial Rent Assistance Program.
The filing also showed that King Street has held discussions with its landlords around accommodations and potential modifications of rental agreements, as it looks to make it through the restructuring process and restart of operations.
King Street was actively preparing for a gradual reopening of its restaurants before provincial authorities implemented a second freeze on indoor dining on Oct. 10. King Street Food Co. says it is currently developing a plan to reopen certain restaurants, with the potential for restrictions on indoor dining in Toronto easing as early as Saturday.
MNP Ltd. has been appointed as monitor of the company’s CCAA proceedings.