After Chapter 11 bankruptcy, fast-food chain faces liquidation

Chicken has become a major battleground in the fast food space.

You have your dedicated chicken chains like KFC and Chick-fil-A, and there’s also Popeye’s, Zaxby’s, Raising Cane’s, and countless others devoted specifically to selling chicken. You also have McDonald’s Burger King, and Wendy’s, which have all made chicken, a major part of the menu.

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That makes it incredibly hard to break into the space. Maybe you can offer a better product but does that difference matter when so many other chains, with so many locations are your competition?

In some ways, fried chicken has become like craft beer. There are a lot of people who are very passionate about it that want to enter the space, but it’s nearly impossible to differentiate yourself.

Trying to market your chicken chain as superior to others seems like a really challenging idea, That’s exactly what Sticky’s has tried to do boldly using the marketing line “the best damn chicken finger you have ever tasted.”

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The company tried to justify that boast on its website.

“Sticky’s was created out of a love for chicken fingers and the desire to think outside of the box. Our founders realized that there were a lot of New Yorkers who really loved chicken fingers but didn’t have a great place to get them; and thus, Sticky’s was born! Our mission is to create the best damn experience through the comfort of chicken fingers in a fun, inclusive space,” it shared.

Sticky’s has filed Chapter 11 bankruptcy

While it opened with noble intentions (or at least lofty goals), Sticky’s was not able to deliver. The chain has been in Chapter 11 bankruptcy for almost a year. During its period of court protection, the company closed three locations and a ghost kitchen.

At the time of its filing with U.S. Bankruptcy Court for the District of Delaware, the company reported $500,000-$1 million in assets and $1 to $10 million in liabilities, with the largest creditor being distributor U.S. Foods.

It seemed in late-April that the chain had found a lifeline.

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“Sticky’s won a Delaware bankruptcy judge’s tentative permission Tuesday to sign a contract to sell its assets to an investment fund for $2 million after surging poultry prices and New York City’s congestion pricing program imperiled the company’s Chapter 11 turnaround plan,” Law360 reported on April 30.

That court order is now under scrutiny which could lead to the company being liquidated.

Sticky’s faces a very uncertain future

Harker Palmer Investors LLC tried to defend its offer in a June 3 court filing in the US Bankruptcy Court for the District of Delaware. The company sought to answer an objection from a Justice Department bankruptcy watchdog objection to the $2 million deal.

It argued that the US Trustee’s legal arguments are “unsupported” and that no creditors — including landlords and supplier US Foods — oppose the revised proposa,” Bloomberg Law first reported.

If the offer is not approved, Harker Palmer’s lawyers argued, the fried chicken chain will have to be liquidated.

“If the Modified Plan is not confirmed, conversion to Chapter 7 will follow resulting in no recovery to any creditors,” the firm said in the filing. 

Chapter 7 would involve a trustee-supervised liquidation process.

Related: Subway owner makes major billion-dollar fast food acquisition

Sticky’s, which has also faced a lawsuit over its name, built its business on the idea that it offers higher-quality chicken fingers than its rivals.

“At Sticky’s we use the finest ingredients, including fresh never frozen antibiotic-free chicken. We take great pride in what we do and what we serve. With a selection of over 18 sauces made in house, it is a labor of love. We believe this process is necessary to serve our customers ‘The Best Damn Chicken,’ it posted on its website.

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