Planet Hollywood International Inc. (Orlando) has won approval to emerge from bankruptcy for the second time in two years.
A U.S. bankruptcy judge approved the theme-restaurateur's reorganization plan, despite concerns from businesses that claimed they are still owed money, state and local governments that are owed back-taxes and a New York landlord with which it has a lease dispute
The company, which will be privately owned under the terms of the reorganization, said it will focus on sales at its 10 remaining restaurants in tourist destinations like Atlantic City, N.J., Hawaii, Las Vegas, Minneapolis'Mall of America, Myrtle Beach, S.C., New York, Orlando, London, Paris and Disneyland Paris. President and ceo Robert Earl will remain in charge of the company.
Only four years ago, during a period in which the economy boomed and themed retailing thrived, Planet Hollywood and its franchises and licensees had 95 restaurants in 31 countries. The company emerged from its first bankruptcy in 2000 with 22 restaurants. But Planet Hollywood again filed for bankruptcy last year, claiming the Sept. 11, 2001, attacks and subsequent decline in tourism had damaged sales.
The reorganized Planet Hollywood will change how it compensates its celebrity endorsers, offering only expense payments instead of issuing celebrities shares of company stock. Under the company's leases, each Planet Hollywood restaurant must have six appearances a year from a movie star.
In approving the plan, the judge gave broad protection from lawsuits to Planet Hollywood's executives, board members and celebrity endorsers. The company's attorney argued such protection was necessary to protect the company's relationships with celebrities such as Arnold Schwarzenegger, Bruce Willis, Kevin Bacon and Matt Damon. But the U.S. trustee in the case objected to the broad protection, arguing that creditors should be able to pursue a lawsuit if they think there was negligence or misconduct. “They're trying to cover themselves instead of trying to take responsibility for actions they may or may not have done,” she said.
Some outstanding issues, such as the company's lease dispute with its New York landlord and claims by AT&T that it is owed almost $700,000, will be decided at a hearing next month.