Four months after the closure of the eight Juliette & Chocolat restaurants, we learned on Wednesday in several media that a new restaurant of the same name will soon open its doors. What can enable a brand to recover so quickly from bankruptcy? The duty asked Michel Thibault, partner and licensed insolvency trustee at Raymond Chabot.
When a company goes bankrupt because it is drowning in debt, its assets are seized by the trustee, who represents the creditors. In the case of a restaurant, we are talking in particular about the furniture and its equipment. However, nothing prevents the previous owner from starting a new business. “If he has not declared personal bankruptcy, he has the right to own a new business,” underlines Mr. Thibault, who is however not responsible for the Juliette & Chocolat file.
After bankruptcy, it may be more difficult for that entrepreneur to borrow money. But according to Mr. Thibault, it is possible to start a restaurant relatively inexpensively: personal savings or investments from a loved one may be enough. The owner can even buy back his own equipment from his creditors.
“Several entrepreneurs start off with a slightly different model — by reducing the size of the premises, for example — because they believe that their business can be viable under certain conditions, by freeing themselves from part of their past,” observes Mr. Thibault.
Several entrepreneurs leave with a slightly different model […]because they believe that it can be viable in certain conditions by freeing themselves from part of their past
And for many restaurants, the debts accumulated during the pandemic are part of this past.
In the case of Juliette & Chocolat, the new restaurant is also a franchise with which the founder of the brand, Juliette Brun, collaborates. The owners of this business are therefore definitely third parties. We can also see on social networks that Mme Brun runs an online store.
As for the use of the name, Mr. Thibault believes that it is rare that creditors can resell it, and they therefore occasionally leave it to the entrepreneur. “It sometimes happens that the name is held by a separate entity which does not lose the right of use,” also underlines Mr. Thibault.
It regularly happens that bankruptcies occur without even a closure of the business. “Let’s say a restaurant goes bankrupt. The trustee will sell the equipment. If the purchaser of the equipment agrees with the lessor to rent the lease, he can occupy the same premises in the same location and hire the same employees. Normally, suppliers prefer this: it allows them to sell the products to the new merchant, and the landlord does not lose a tenant. It’s better for everyone,” explains Mr. Thibault.
As for the brand’s reputation, according to Jacques Nantel, professor emeritus at HEC Montréal, the impact is likely to be minimal. “Customers will be happy that it reopens,” he judges. He points out that even big brands like Kodak have found success after emerging from bankruptcy.