Planet Hollywood plans makeover after second bankruptcy
ORLANDO, Fla. -- Trying to regain its star power, Planet Hollywood International Inc. is getting a makeover as it emerges from bankruptcy for the second time in more than two years.
The movie-themed restaurant and retail store company, which once counted actors Bruce Willis, Demi Moore and Arnold Schwarzenegger as backers, plans to re-emerge as a leaner company, having slimmed down from 22 to 10 restaurants.
It will be privately held, after having been publicly traded since 1996.
U.S. Bankruptcy Judge Arthur Briskman is expected to confirm the company's reorganization plan during a hearing on Monday, despite some objections from companies and local governments that claim they're still owed money and back-taxes.
If the plan isn't approved, Planet Hollywood's only options are to find a buyer or liquidate.
"As far as confirmation is concerned, the train has already left the station," said Roy Kobert, an Orlando bankruptcy attorney representing AT&T Corp., which claims Planet Hollywood owes it almost $700,000.
To help pay off two lenders, Planet Hollywood is holding an auction of some of its movie memorabilia over the weekend in an effort to raise at least $1 million.
Among the 300 items to be auctioned Saturday by Sotheby's in New York is a dress worn by screen siren Rita Hayworth, James Cagney's suit from "Yankee Doodle Dandy," a Superman costume worn by actor Christopher Reeve and a stagecoach used by John Wayne.
Ten restaurants will continue to operate in key tourist destinations, including Honolulu, Las Vegas, New York, Orlando, London and Paris. Company officials say they may sell the London location soon.
The locations being kept open produced 60 percent to 70 percent of the company's revenue before it filed for bankruptcy, said CEO and President Robert Earl.
In 1998, Planet Hollywood and its franchises and licensees had 95 restaurants in 31 countries. But after a $201 million operating loss in 1998, the company filed for bankruptcy the next year, citing a decrease in business caused by increased competition.
Planet Hollywood emerged from bankruptcy in 2000 but filed for bankruptcy again last year, claiming the Sept. 11 attacks and a subsequent decline in tourism had damaged sales.
Despite the company's tumultuous track record, there will be no changes in the management team, including Earl, whose celebrity contacts and intimate knowledge of the company were crucial to getting the unsecured creditors to agree to the plan.
"Without Mr. Earl and without the celebrities, there would be no reorganization," Andrew Silfen, an attorney for a committee for unsecured creditors, said during a recent hearing.
Not everyone is happy with the plan, and objections have been filed. Planet Hollywood's landlords in some locations claim the company hasn't brought enough celebrities to the restaurants, and the company is in a rent dispute with its New York landlord.
But attorneys in the case said the objections shouldn't stand in the way of the judge's approval.
Under the plan, Earl will end up with a 10 percent stake in the company, with the rest divided between three lenders and investors. Unsecured creditors will be paid $2.4 million minus any fees, and a $100,000 administrative fund will be created to pay for any lawsuits.
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Planet Hollywood: www.planethollywood.com