
Fried chicken chain says it may have to close all locations
A 'gourmet' New York fried chicken is warning it may be forced to shut down all of its locations if a federal bankruptcy watchdog continues to block its proposed sale. Sticky's, which has 12 locations in the New York area, filed for Chapter 11 bankruptcy in April last year in a bid to cut its debts.
Launched in 2012, it quickly earned cult appeal with farm‑raised, antibiotic‑free chicken and an inventive lineup of sauces like Nashville Numb and Vampire Aioli. It peaked at 16 locations. But like many smaller chains, Sticky's was hit hard by the pandemic — particularly due to its dependence on foot traffic from Manhattan office workers. Rising prices for chicken and potatoes added to the problems.
Sticky's has secured a $2 million cash offer from Harker Palmer Investors, which would also take responsibility for some of the debts. But the sale has hit a roadblock. The Justice Department's bankruptcy watchdog — the US Trustee — is pushing back, claiming the deal would give Harker Palmer too much legal protection if the company were sued in the future. In a court filing last week, Sticky's warned that without approval of the sale, it will be forced into Chapter 7 liquidation — shutting down all stores and leaving creditors empty-handed.
In February Sticky's said it would soon have to change from Chapter 11 bankruptcy, which allows a business to run as normal during the process of restructuring, to Chapter 7, leading to liquidation. The fast casual chain said the move would be necessary as it was unable to pay its own bankruptcy costs and did not have the cashflow to make promises for creditor distributions. In response to the watchdog's objections, Harker Palmer says it has revised the terms of the offer to address liability concerns.
Sticky's joins the likes of Red Lobster, Hooters and On The Border who have also filed for bankruptcy in the last year. Fast-casual and casual dining chains have suffered in recent years as inflation-weary consumers balk at menu price rises.
Hooters filed for Chapter 11 bankruptcy in March and has since closed dozens of locations. The chain — known for its scantily-clad waitresses — blamed the rising cost of rent and food and customers eating out less.
On The Border - a Tex-Mex chain that offers queso, tacos, fajitas, and enchiladas - filed for bankruptcy in March after facing insurmountable debts. Red Lobster has been among the most notable bankruptcies, shuttering nearly 100 restaurants and filling for Chapter 11 protection last year.
The chain had struggled with rising lease and labor costs in recent years and also promotions like its iconic all-you-can-eat shrimp deal that backfired . The chain has now emerged from bankruptcy but has vowed to never bring back the endless shrimp deal again .
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