Children’s arcade and pizza chain Chuck E. Cheese failed to persuade a bankruptcy judge to delay or cut rent obligations due to COVID-19-related restrictions on the business, WSJ Pro Bankruptcy reported. The ruling yesterday from Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston sounds a warning note for retailers and restaurants trying to survive a pandemic-driven drop in revenue, while comforting commercial landlords trying to do the same. The question of rent cuts and delays for businesses hurt by COVID-19 has come up in other bankruptcy cases, including that of Ruby Tuesday Inc. which like Chuck E. Cheese resorted to chapter 11 protection as fear of infection and government regulations kept customers away. Judge Isgur said that U.S. bankruptcy laws limit how much help he can extend to Chuck E. Cheese when it comes to the rent obligations owed on six restaurants in North Carolina, Washington and California. According to the ruling, varying degrees of health restrictions constricted the business, which is built around giving children a place to play as part of family dining. However, the Bankruptcy Code only allows the company to delay rent payments for 60 days, and nothing in state law or the terms of the leases changes that, according to the ruling. Leases are governed by their own provisions and by the laws of the states where the restaurant is located.
