Feb. 11, 2022—Service King has begun talks with creditors to restructure the company’s debt, the Wall Street Journal reported.

The restructure could include a potential chapter 11 filing, which is often referred to as a “reorganization” bankruptcy. In that scenario the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. 

Lenders in the company’s $775 million term loan have signed nondisclosure agreements with the company to begin negotiations ahead of a looming debt maturity due in July, according to the report. 

The restructuring plans may change and the company may be able to restructure its debts out of court, according to people familiar with the matter. 

The company has been reportedly strapped for cash, working to conserve cash since last fall when it elected to defer cash payments to term lenders and instead tack on additional debt to the loan balance and also drew down on a revolving line of bank credit.

Service King did not respond to WSJ’s request for comment.