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Bankrupt Chuck E. Cheese Parent Wants to Shred 7 Billion Tickets

Sept. 15, 2020, 4:50 PM

Chuck E. Cheese’s parent company asked a bankruptcy court to approve settlements to destroy 7 billion paper Prize Tickets that have built up in the company’s supply chain as a result of the Covid-19 pandemic.

CEC Entertainment Inc.'s vendors now hold “enough tickets to fill approximately 65 forty-foot cargo shipping containers,” according to CEC’s emergency motion filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

It will cost $2.28 million to destroy the tickets, or $1 million less than CEC would have paid if the Prize Tickets were cycled through the entire supply chain, James A. Howell, CEC’s Chief Financial Officer, said in a court filing Monday.

The tickets, which contain the Chuck E. Cheese trademark, are used in the company’s arcades and can be redeemed for prizes.

Covid-19 shutdowns led to CEC’s bankruptcy filing in June.

Some locations have resumed business. But the pandemic also prompted the company to accelerate the use of contactless e-tickets and phase out paper tickets and the ticket “munchers” that collect and count the tickets, the company said in its motion.

Under the proposed settlements, vendors Eastern Trading LLC, Supply Chain Engineering, and Performance Food Group have agreed to destroy the tickets instead of delivering them to the company or releasing them to the public, the motion said.

A hearing has been scheduled Sept. 21.

The case is CEC Entertainment, Inc., Bankr. D. Del., No. 20-33163, emergency motion filed 9/14/20.

To contact the reporter on this story: Leslie A. Pappas in Wilmington, Del. at lpappas@bloomberglaw.com

To contact the editor responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Roger Yu at ryu@bloomberglaw.com

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