After 30 years in business, Chicago-founded WhirlyBall filed for subchapter V bankruptcy protection on Friday in an attempt to restructure its debt obligations.
Chicago Whirly Inc., an entity of Whirl Management Inc., filed for bankruptcy protection in the U.S. Bankruptcy Court of the Northern District of Illinois. Chicago Whirly estimated 100 to 199 creditors, and claimed between $1 million and $10 million in assets as well as the same range in estimated liabilities.
WhirlyBall CEO Adam Elias told the Chicago Sun-Times the aim is to restructure the company’s obligations and manage some of its lease guarantees. The filing is only for the Bucktown location at 1825 W. Webster Ave., which is the guarantor of its troubled Naperville location.
Court documents show the filing stems from issues at WhirlyBall’s Naperville property, where the business “continues to face ongoing challenges principally because of the high rent under the Lease.” Chicago Whirly is the guarantor for the Naperville lease, and alongside Whirl Management, it can no longer help with rent payments.
Chicago Whirly “may be liable to the landlord,” after the company’s Naperville entity couldn’t pay its rent “without depleting its remaining liquidity,” according to court documents. Negotiations to restructure the Naperville lease have been unsuccessful, the filing said.
Elias said the company chose to go the subchapter V route because it’s geared toward small, family businesses like WhirlyBall.
Subchapter V — which falls under Chapter 11 bankruptcy and was created as part of the Small Business Reorganization Act of 2019 — is aimed at small businesses and temporarily raises the debt eligibility threshold from $2.7 million to $7.5 million, though the higher threshold is set to expire Friday. It also imposes shorter deadlines for filing reorganization plans, allows for more flexibility in negotiating restructuring plans with creditors and doesn’t require the payment of U.S. Bankruptcy Trustee quarterly fees, according to the Justice Department.
WhirlyBall is still “operationally sound,” Elias said, so bankruptcy protection will help it get through the process as soon as possible. WhirlyBall does not anticipate any layoffs or impact on jobs at this time.
The subchapter filing puts the company on an expedited 90-day process to work through its reorganization, compared to years for some companies.
“This financial reorganization move helps set the company up for long term success, stability, and growth,” WhirlyBall said in a written statement. “We continue welcoming guests and hosting events across all five WhirlyBall locations … and are operating as usual.”
WhirlyBall is a cross between several popular team sports and bumper cars. Players ride in “Whirlybugs” and use scoops — like shorter lacrosse sticks — to pick up a ball and launch it at a target to score. Similar to basketball, the targets hang 10 feet in the air.
Like many of its industry peers, WhirlyBall was hit hard by the pandemic. Elias said the company had no revenue in December 2020 while it was shut down and mass gatherings were limited.
“That was a very tough holiday season, which is normally a very busy time of year,” he said.
WhirlyBall temporarily closed its locations multiples times during the pandemic. But it still had vendor obligations and payments on the 40,000- to 50,000-square-foot facilities that WhirlyBall rents.
“That started to create several different pain points,” Elias said.
Sam Elias, Adam Elias’ father, started the business in 1993 in Chicago, naming it after the game that’s been around since the 1960s. The company celebrated its 30th anniversary last year.
WhirlyBall has locations in Chicago, Naperville and Vernon Hills as well as in Brookfield, Wisconsin, and Colorado Springs, Colorado.
The locations have a restaurant, bar and private event space. Some also have bowling, laser tag and other games.
WhirlyBall continues to host events and offer event packages to customers across all five locations.
“We’re committed to our team members, first and foremost, and our guests, and look forward to building on our legacy,” Elias said. “This is all for our focus of growing the company and … this is only going to help further improve the health of our organization.”