News

Gigi's Cupcakes, Gatti's file bankruptcy with $32M debt

January 10, 2019

Sovrano LLC, which owns Gigi's Cupcakes and Gatti's Pizza, has filed for bankruptcy protection on behalf of both brands, according to a statement that the company sent Thursday via email to FastCasul's sister site, Pizza Marketplace.

"Due to issues that were existing when we acquired the brand that we have not been able to resolve, we are taking this step to ensure the strength of the brand and the franchise system moving forward," the company wrote. "This is necessary to address the capital structure and primary banking relationship and is not a result of the health of the brand’s operations."

The Chapter 11 debt protection filing, which was entered Jan. 4 in U.S. Bankruptcy Court in the Northern District of Texas in Dallas, said it had more than $32 million in secured debt

"This filing will have no impact on operations at the store level. Customers will not see any changes in service or the quality of our products," the company wrote. "In addition, this filing will have no impact on our level of support we provide to each of our franchisees. The company will continue to pay suppliers, vendors and employees."

Gatti's, formerly Mr. Gatti's Pizza, was founded in 1969, and had been attempting to recover its footing in today's highly competitive pizza market. Gigi's Cupcakes is nearly 11 years old and has more than 100 units.