Friendly's seeks bankruptcy protection under Chapter 11

friendlys-bankruptcy-getty.jpgThe parent company of restaurant chain Friendly's has filed for Chapter 11 bankruptcy protection and has already closed 63 of its locations, the company said Wednesday (Oct. 5). About 1260 jobs were lost, as each location employed roughly 20 people.

Chapter 11 bankruptcy protection means that when a business is unable to pay its debts, it files for protection with a bankruptcy court. After that, the debtor usually retains control of the business as a "debtor in possession" and is subject to the court's oversight.

The result of Chapter 11 protection usually means a reorganization of the assets and debts. Debtors sometimes emerge from under Chapter 11 protection within several months.

The company tells the Boston Globe that while 63 locations closed, "424 Friendly's restaurants will be open for business as usual during the company's financial restructuring and there is expected to be no impact to manufacturing and distribution operations."

Friendly's, known for its ice cream and burgers, was founded in 1935 in Springfield, Mass. and has locations spanning the eastern seaboard.