TCBY Franchisee Association Objects to Mrs. Fields Reorganization
Several parties, including the Internal Revenue Service and a group of frozen-yogurt franchisees, are objecting to Mrs. Fields Famous Brands Inc.'s prepackaged plan of reorganization, which the cookie company has considered its fast-track ticket out of bankruptcy-court protection.
Rachel Feintzeig writes in the Wall Street Journal that a bankruptcy judge is set to consider Mrs. Fields' plan, which it filed alongside its bankruptcy petition Aug. 24, at a hearing on Thursday. And while Mrs. Fields said in August that a sufficient number of claims holders already had accepted the plan, the TCBY Franchisee Association and the IRS are urging the court to reject it unless it is amended to include added protections for the groups.
The independent association of frozen-yogurt store owners has numerous contracts with Mrs. Fields -- whose retail empire includes TCBY -- and claims that the company hasn't committed to upholding those agreements.
"The Association has requested assurances from the Debtors that they will not seek to reject...franchise agreements between the Debtors and their franchisees," the TCBY Franchisee Association said in court documents filed Thursday. "The Debtors have failed to provide such assurances as of this date."
In addition, the IRS, a creditor that says it is owed more than $216,000, called the plan "infeasible."
It objected to Mrs. Fields' treatment of its priority tax claims in the plan and insisted that the company pay the claims "in full in cash with interest."
With 1,268 franchises in the U.S. and 21 countries abroad, Mrs. Fields is one of the largest retailers of specialty baked goods and frozen yogurt in the country. But the company was highly leveraged and had warned as early as June that it might need to seek bankruptcy protection if unable to negotiate a restructuring agreement with its senior noteholders out of court.