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Washington pizza chain files for Chapter 7

A Washington, D.C.-based pizza recently filed for Chapter 7 bankruptcy, according to court records. The chain, Armand's Chicago Pizzeria Inc., had seven locations in the Washington, D.C., area, as well as an additional branch in a nearby state.

U.S. Bankruptcy Court documents show that the company owes between $100,001 and $500,000 in debts to up to 49 creditors. Some of those creditors include a bakery, American Energy Systems, water utilities and the retail chain Sam's Club. Reports indicate that the business has less than $50,000 in assets.

The company has been in business for 35 years, according to franchise owners. Its flagship location was shut down in June, though some of the other restaurants remain open. The manager of the Capitol Hill location of Armand's said that the location will remain open because it is independently owned. The company has not responded to requests for additional information.

Chapter 7 bankruptcy is known as liquidation, because all assets are sold off to repay debts to creditors. Other options, such as Chapter 11 and Chapter 13 bankruptcy, allow the business to restructure its payment plans instead of selling all assets.

Armand's has chosen instead to sell all of its holdings, including furniture, kitchen equipment and other necessities, in order to repay its large debts. It is therefore less likely that the business will be able to quickly rebound from the bankruptcy proceedings. Many companies who declare Chapter 7 bankruptcy close their doors for good.

Still, Chapter 7 bankruptcy may have been the best choice for the owner of the company, depending on the state of the business.

Source: The Washington Business Journal, "Armand's Chicago Pizzeria files for Ch. 7 bankruptcy," Missy Frederick, Aug. 1, 2012

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