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Tully's Coffee files Chapter 11

October 12, 2012

It looks like Starbucks may soon have a little less competition. Tully's Coffee is closing an undisclosed number of its cafes as part of its parent company's filing of Chapter 11 bankruptcy, according to a company announcement.

"After careful consideration, our Board of Directors and Leadership Team believe that restructuring under the protection of Chapter 11 is a necessary step and the right thing to do for the future of the company," Scott Pearson, president and CEO of TC Global, said in the statement. "Before making this difficult decision, we also sought the counsel of the highly regarded CRG firm, Deloitte Financial Advisory Services, to provide third-party assessment of our situation and confirm that this was the best course of action for us to take."

Tully's, based in Seattle, has multiple objectives for reorganization under Chapter 11 of the federal Bankruptcy Code, including the elimination of significant challenges that were preventing the company from being profitable. In filing, Tully's can lower operating expenses by relieving legacy costs as well as effectuate a restructuring of the balance sheet by securing working capital. With this plan, the company anticipates emerging from Chapter 11 sometime in 2013, Pearson said.

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