Local coffee chain Compass Coffee LLC says it is nearly out of cash after filing for bankruptcy in January and selling substantially all of its assets to U.K.-based coffeehouse chain Caffè Nero.
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Compass is now asking a federal court to dismiss its bankruptcy case because it lacks the funds to confirm a Chapter 11 plan, the company said in a court filing this week.
The request means Compass is no longer seeking the court’s approval for a restructuring plan, which would keep its business operating so it could pay back creditors over time. A dismissal of the case would allow Compass to pay outstanding administrative expenses and professional fees with its remaining funds, the Washington Business Journal reported.
“Debtor does not have sufficient funds to formulate and prosecute a plan,” Compass said in its Wednesday motion. “Even if the Debtor were able to confirm a plan at this juncture, there would be no funds to distribute to unsecured claimants in the Case.”
A hearing is scheduled for Aug. 19. An attorney for Compass didn’t respond to a request for comment in time for publication.
Compass filed for Chapter 11 bankruptcy protection in January after several years of struggling since the pandemic. Compass co-founder Michael Haft said in a declaration at the time that lower office usage and a reduction in federal employees severely impacted customer traffic.
Compass had operated 25 locations in D.C., Maryland and Northern Virginia. It closed on its $4.8M sale to Caffè Nero in March. Compass now has no ongoing business operations, it said in its motion. It said it was able to pay secured claims in full and pay the costs to finalize the sale of most of its assets. Since closing on the sale, it said it has been focused on selling the miscellaneous assets Caffè Nero didn’t acquire.
The company still faces separate litigation, including claims Compass Coffee co-founder Harrison Suarez made against the company and Haft for allegedly forcing him out of the business, according to the WBJ.
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