A not so Friendly Chap. 11 – The New York Post

A not so Friendly Chap. 11

By JOSH KOSMAN Last Updated: 12:36 AM, October 6, 2011

Posted: 12:36 AM, October 6, 2011

Sun Capital Partners is trying to have its Fribble and eat it too.

The private-equity firm has made a bid to repossess Friendly’s at a price presumably less than its $310 million in debt after it arguably just drove it into bankruptcy.

Sun, which bought Friendly’s in 2007, put the iconic ice cream and sandwich chain in Chapter 11 yesterday, and said it had reached a deal to buy it out of bankruptcy.

“I wonder if the bankruptcy judge will find Sun’s stalking horse bid a conflict of interest?” asked restaurant strategist John Gordon of the Pacific Management Consulting Group.

Sun, soon after buying the chain, separated its real estate, selling its headquarters and the land under 160 of its 512 restaurants for more than $40 million, Gordon said. Sun used the money to pay down some of the debt incurred from the purchase.

Friendly’s restaurants started paying higher rent.

Today, Friendly’s, without referencing how Sun split its assets, blamed higher rents as part of the reason it collapsed.

A source close to Friendly’s said, “I would encourage you to pursue that line of thinking,” when asked why the chain went bankrupt.

Company wide EBITDA (earnings before taxes, depreciation and amortization) fell from $45 million in 2006 to an estimated $13 million this year.

A Sun spokesperson declined comment.