An international coffee franchising company bearing a similar name to Canada’s well-known Second Cup coffee chain has filed for creditor protection, but the two businesses are completely separate entities.
The Second Cup Coffee Company Inc., which operates franchises in about 20 countries but none in Canada, obtained protection under the Companies’ Creditors Arrangement Act on May 22, according to court documents filed with the Office of the Superintendent of Bankruptcy.
The filing has created confusion with Second Cup Coffee Co., the familiar Canadian coffee retailer that operates 178 stores across the country and celebrated its 50th anniversary this year.
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“The company is not affiliated with and is independent from Second Cup Coffee Co., the Canadian coffee chain and retailer,” according to insolvency filings.
The international franchisor, which controls global rights to the “Second Cup Café” brand, operates approximately 170 cafes worldwide in countries including Pakistan, Egypt, Azerbaijan, Cyprus and across sub-Saharan Africa. The company owes creditors approximately $8.9 million.
The CCAA application was filed by the company’s majority creditor, Arbat Capital Group Ltd., after shareholders and directors became concerned that the company would be unable to repay loans without restructuring.
Grant Thornton’s Jason Kanji is serving as the monitor for the proceedings, which aim to stabilize operations and explore restructuring options.
Meanwhile, the Canadian Second Cup Coffee Co. remains financially stable under the ownership of Quebec-based Foodtastic Inc., which acquired the chain in 2021. The Canadian company recently made headlines for dropping surcharges on dairy alternatives and seeking to expand internationally.
The CCAA is federal legislation that allows financially distressed corporations owing more than $5 million to restructure their affairs under court supervision rather than enter bankruptcy.
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