(Bloomberg) -- The Pizza Hut restaurants up for sale in the bankruptcy of operator NPC International Inc. could be bought by a competitor in the pizza industry, the company's lenders said in a court filing.
Pizza Hut wants the right to approve any buyer of its restaurants currently owned by NPC, the pizza chain's largest domestic franchisee, to ensure any new owner can handle the brand's standards.
If Pizza Hut doesn't consent to the change in control, any buyer will only own the leases and property -- not an operating Pizza Hut franchise, the company said in its objection Friday. “The debtors simply cannot avoid the fact that any sale requires Pizza Hut's approval to succeed,” the company said in its objection.
Lenders to NPC said the measures proposed by Pizza Hut would chill bidding for its assets. The lenders also said there's no reason why NPC's portfolio of about 900 Pizza Hut restaurants have to be operated as Pizza Hut restaurants, raising the possibility that those locations could be bought and run by a competitor like Domino's Pizza Inc. or Papa John International Inc.
Alternative Brand
“The debtors must explore whether there are bidders in the market –- including competitive brand owners –- interested in operating these assets under an alternative brand,” the lenders said in their filing.
To bolster their case, the lenders cite a 2012 bankruptcy court decision in which 14 bankrupt KFC restaurants were sold and re-branded as Popeye's restaurants.
NPC filed for bankruptcy in July with more than $900 million in liabilities and has filed a bankruptcy plan with both asset sale and reorganization options.
A hearing on the issue is scheduled for 3:30 p.m. in Houston.
The case is NPC International Inc., 20-33353, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
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