November 4, 2020 – The Court hearing the FIC Restaurants cases issued an order approving the Debtors’ request that the Court (i) waive solicitation requirements in respect of their Plan and (ii) approve a proposed timetable culminating in a December 17th Plan confirmation hearing  [Docket No. 75].

As to the request to waive solicitation requirements [Docket No. 16], the Debtors noted: "Under the proposed Plan, all classes of claims or interests are unimpaired (or have consented as is the case with the affiliated Secured Lenders) and thus are deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Accordingly, the Debtors respectfully submit there is no need to solicit the Plan and that the relief sought herein is necessary and appropriate."

Plan Overview

The Combined Document [Docket No. 18] reads: “The Plan represents the Debtors’ proposal in these Chapter 11 Cases for the sale of substantially all assets and liquidation of all or substantially all of their remaining assets pursuant to a (i) concurrent private sale process under section 363 of the Bankruptcy Code, with the closing contingent upon the Effective Date of the Plan; and (ii) a Plan process sponsored by the Plan Sponsor that, in conjunction with the proceeds from the private sale to the Purchaser, will leave all Classes of Claims Unimpaired, other than Secured Claims held by the Secured Lenders, which are non-Debtor affiliated entities (and include the Plan Sponsor), that are waived, released and discharged by express consent as substantial contributions to the Plan. The following provides a summary of the key economic terms and mechanics of the Plan:

• All General Unsecured Claims that are Allowed will be Unimpaired under the Bankruptcy Code and paid in full in Cash.
• To the extent not assumed and assigned to the Purchaser, all Executory Contracts and Unexpired Leases will be rejected through the Plan or during the course of the Chapter 11 Cases pursuant to section 365 of the Bankruptcy Code. The non-Debtor counterparties to the rejected Executory Contracts and Unexpired Leases will also be Unimpaired as their Allowed Rejection Claims will be paid in full in cash in accordance with the relevant provisions of the Bankruptcy Code.
• The Debtors will fund distributions under the Plan from (i) Cash generated by continued operations, and cash collateral in connection with the Cash Collateral Orders; (ii) proceeds from the concurrent private sale of substantially all assets to the Purchaser; (iii) borrowing under the Credit Agreements prior to the Petition Date; and (iv) commitments obtained from the Plan Sponsor to fund additional amounts after the Effective Date pursuant to existing availability under the Senior 2019 Credit Facility (and prior to the waiver, release and discharge of the senior credit facility).
• As noted, all Secured Lender Claims under the Credit Agreements will be waived, released and discharged under Class 2A, 2B and 2C after the Effective Date of the Plan as part of the comprehensive settlements and, in addition, substantial contributions made by the other Released Parties under the Plan. This includes, without limitation, the waiver, release and discharge of over $430,000 in deferred rent claims held by indirectly affiliated SIC Property, LLC related to corporate-owned restaurant locations, and a similar waiver and discharge of substantial management fees owed to the Debtors’ parent entities.”

The following is summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1: (“Other Priority Claims”) is unimpaired deemed to accept and not entitled to vote on the Plan. The estimated amount of claims is $0 and estimated recovery is 100%.
• Class 2A: (“Senior 2019 Credit Facility Secured Claims”) is unimpaired by consent and not entitled to vote on the Plan. The estimated amount of claims is $43.38mn and estimated recovery is N/A. As part of the comprehensive settlements and substantial contributions under the Plan, the Holder of the Allowed Senior 2019 Credit Facility Secured Claim shall, after the Effective Date of the Plan, (i) fund all binding commitments as Plan Sponsor to the Plan pursuant to availability  under the Senior 2019 Credit  Facility, and then waive, release and discharge such Claim and all Liens on the Debtors’ assets pursuant to the Senior 2019 Credit Facility; and (ii) except as otherwise provided in the Plan, forgo any and all distributions under the Plan on account of such Claim.
• Notwithstanding anything to the contrary herein, in the event all Allowed (i) Claims in Classes 1, 3; and 4; and (ii) Administrative Claims and Priority Tax Claims, have in each case been satisfied in full under the Plan, and all other obligations under the Plan (including Statutory Fees) have been satisfied, any remaining funds and/or other assets, including, without limitation all Causes of Action (including those identified on the Schedule of Retained Causes of Action), held by the Debtors or Reorganized Debtors shall vest in and be transferred to the Plan Sponsor.
• Class 2B: (“2018 Credit Facility Secured Claims”) is unimpaired by consent and not entitled to vote on the Plan. The estimated amount of claims is $32.1mn and estimated recovery is N/A. As part of the comprehensive settlements and substantial contributions under the Plan, the Holder of the Allowed 2018 Credit Facility Secured Claim shall, after the Effective Date of the Plan, (i) waive, release and discharge such Claim and all Liens on the Debtors’ assets pursuant to the 2018 Credit Facility; and (ii) forgo any and all distributions under the Plan on account of such Claim.
• Class 2C: (“2011 Credit Facility Secured Claims”) is unimpaired by consent and not entitled to vote on the Plan. The estimated amount of claims is $12.4mn and estimated recovery is N/A. As part of the comprehensive settlements and substantial contributions under the Plan, the Holder of the Allowed 2011 Credit Facility Secured Claim shall, on the Effective Date of the Plan, (i) waive, release and discharge such Claim and all Liens on the Debtors’ assets pursuant to the 2011 Credit Facility; and (ii) forgo any and all distributions under the Plan on account of such Claim.
• Class 3: (“Other Secured Claims”) is unimpaired, deemed to consent and not entitled to vote on the Plan. The estimated amount of claims is $7.12mn (this reflects the BMO Letter of Credit, which is fully cash collateralized.and estimated recovery is N/A. Each Holder of an Allowed Class 3 Other Secured Claim shall receive in full and final satisfaction, settlement, and release of and in exchange for such Allowed Class 3 Claim: (A) return  of the collateral  securing  such Allowed Other Secured Claim; or (B) Cash equal to the amount of such Allowed Other Secured Claim; or (C) such other, less favorable treatment which the Debtors, the Plan Sponsor, and the Holder of such Allowed Other Secured Claim have agreed upon in writing.
• Class 4: General (“Unsecured Claims”) is unimpaired, deemed to consent and not entitled to vote on the Plan. The estimated amount of claims is $3.83mn (this includes an estimated amount of currently unliquidated and contingent claims that may arise pursuant to the rejection of Executory Contracts and Unexpired Leases.) and estimated recovery is 100%. Each Holder of an Allowed General Unsecured Claim shall, in exchange for full and final satisfaction, settlement, release, and discharge of such Claim, receive at the sole option of the Debtors and the Plan Sponsor either: Payment in Cash in the full amount of its Allowed General Unsecured Claim; or Such other treatment as would render such Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code.
• Class 5: (“Interests”) is unimpaired, deemed to consent and not entitled to vote on the Plan.

Key Dates

• Plan Supplement Filing Deadline: December 3, 2020
• Confirmation Objection Deadline: December 10, 2020
• Combined Hearing: December 17, 2020

About the Debtors

According to the Debtors: “Founded in 1935 as a single ice cream shop in Springfield, Massachusetts, the Debtors grew to a chain of casual dining restaurants that is widely regarded as an authentic, yet affordable, dining experience, with a broad menu offering and hallmark ice cream dessert selection catering to all family members. In its 85-year history, the iconic Friendly’s Restaurants brand name became associated with high quality food, customer service, good times and great memories.

The Debtors’ restaurants hallmark high-quality desserts, including its iconic premium ice cream product offerings. To differentiate itself from other family casual restaurants, the Debtors’ premium ice cream products have always been a focal point of the Friendly’s menu as the highlight of any meal. Customers have cited the Debtors’ ice cream products as the key reason for choosing to dine at Friendly’s.

On a go forward basis, the Debtors will have approximately 50 corporate restaurants and serve as franchisor on another approximately 80 locations. They currently employ approximately 34 full-time employees at the Debtors’ Wilbraham, Massachusetts headquarters and 1,664 other part-time and full-time restaurant employees and restaurant and regional managers. None of the Debtors’ employees unionized or are covered by a collective bargaining agreement."

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