California Pizza Kitchen Inc. is close to a settlement with its unsecured creditors that clears a path for the restaurant chain to sell itself or hand over ownership to lenders, WSJ Pro Bankruptcy reported. At a hearing on Thursday in the U.S. Bankruptcy Court in Houston, the company’s lawyer Matthew Fagen of Kirkland & Ellis LLP said California Pizza Kitchen is nearing a deal that ensures unsecured creditors will go along with its restructuring proposal. The company filed for bankruptcy in July hoping to find a buyer or hand ownership to top-ranking lenders. The sale process has begun, with bids due Oct. 2. Unsecured creditors that rank behind lenders in the repayment line have been in talks to increase the amount they will get under the plan, according to court filings. The coming settlement “gives California Pizza Kitchen the ability to choose its own destiny, whether it be an equitization…or a sale pursuant to our bidding procedures,” Fagen said at the hearing. Under the restructuring proposal, which requires court approval, CPK would cut its roughly $400 million in debt to $174 million. Unsecured creditors would get close to $2 million and 3.5 percent of the company’s shares if lenders take control of the equity. If the company is sold to an outside bidder, the unsecured creditors would get an additional $1.5 million in cash under the proposed settlement, court filings show.
