CEC Entertainment Inc. will not pursue a sale of its assets and will instead reorganize pursuant to its proposed stand-alone reorganization plan, the company's attorney said at an Oct. 8 bankruptcy court hearing.

As reported, early last month the company entered into a plan support agreement, or PSA, providing for a sale process (including a possible credit bid) or, alternatively, a toggle to a stand-alone reorganization plan under which first-lien lenders would receive 100% of the equity in the reorganized company along with a $175 million, seven-year, first-lien second-out term loan, while unsecured noteholders, with claims of about $215 million, would receive three-year warrants for 5% of the equity in the reorganized company. General unsecured creditors would receive cash in an amount to be determined.

Under the contemplated sales process, the company's first-lien lenders were required to set a reserve price at least five days before the proposed bid deadline of Oct. 21.

At an Oct. 8 hearing, the company's attorney, Matthew Barr, of Weil Gotshal & Manges LLP, told the Houston bankruptcy court that the lenders, with claims of roughly $756 million in term loans and $108 million in revolving loans, plus accrued and unpaid interest, had set a reserve price last week of $875 million. He added that none of the parties that had submitted indications of interest to, or otherwise expressed interest in, the company were willing to meet that reserve.

As a result, Barr said, the company would pursue its debt-for-equity plan.

Barr also said, however, that the company remained open to a third-party proposal. He noted that over the next week the company would be amending its bidding procedures, along with its reorganization plan and disclosure statement, to provide a mechanism for the company to consider such proposals as its reorganization proceeded.