Coffee chain closes cafes, finds Chapter 11 bankruptcy lifeline

Losing a local coffee shop changes the makeup of a community.

Coffee shops aren’t just a place to eat and drink; they’re a place to gather with friends, a “third place” after home and work. Longtime Starbucks CEO Howard Schultz always advocated for this.

Fans of Compass Coffee, however, have seen their so-called third place disappear, as the chain has steadily closed locations after its January Chapter 11 bankruptcy filing.

That filing put the entire company at risk, with Compass filing for permission to immediately terminate 10 leases, although it did share hopes that suitors would be interested in those locations, according to documents on PacerMonitor.

Now, Compass Coffee, which has closed 10 locations with 17 still operating as part of its bankruptcy process, may have a lifeline that could save the cafes, if not the brand.

When Compass Coffee filed for Chapter 11 bankruptcy, London-based coffee chain Caffè Nero submitted a “stalking horse” bid of $2.9 million for the brand and its assets.

“The stalking horse bidder is the bidder who sets the floor for other bidders to bid against. By establishing a baseline bid, the stalking horse bidder protects the debtor from a situation where it might only receive unreasonably low bids for its assets,” the Troutman Pepper Locke law firm shared on its website.

Caffè Nero ultimately was the winning bidder, but had to raise its price to $4.75 million, Compass CEO Michael Haft told The Washington Post.

More Bankruptcy:

The higher sale price means there were other bidders. The bankruptcy court still needs to approve the sale.

“Over the course of three days, Haft said, the auction went through 24 rounds of bidding among the five groups looking to purchase Compass’s inventory, equipment, intellectual property, and other assets. One of the bidders — a private-equity firm — submitted a bid but was disqualified because it didn’t have the necessary capital to complete a deal,” the Post reported.

For the time being, assuming its bid gets approved, Caffè Nero plans to continue operating the remaining 17 locations under the Compass name. Haft told The Post it was unclear whether it would ultimately rebrand the cafes.

“A hearing to approve the sale is scheduled for Feb. 26 in the U.S. Bankruptcy Court for the District of Columbia. If the sale is approved and closes, Caffè Nero would become the new owner of substantially all Compass Coffee assets,” according to Daily Coffee News.

Caffè Nero prides itself on the sourcing of its coffee beans and its roasting method.

“We set ourselves apart through our roasting technique. Each coffee batch is gently roasted in high-quality equipment able to capture the fullest flavor from every bean,” the company shared on its website.

Caffè Nero, which was founded in 1997, has over 1,000 locations across Europe and the Middle East, as well as about 40 in the United States. Its U.S. cafes are mostly in Massachusetts, Rhode Island, and Pennsylvania, according to the store locator on its website.

This isn’t the first time the coffee brand used acquisitions for growth.

“Prior acquisitions of smaller, specialty-focused chains include the purchase of 21 locations of U.K. specialty roaster 200 Degrees in 2024,” according to Global Coffee Report.

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A summary of court filings and reporting related to Compass Coffee’s Chapter 11 case.

• Compass Coffee, a Washington, D.C.-area coffee chain founded in 2014, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in Washington, D.C. in early January 2026, according to PacerMonitor.

• The filing was made by co-founder and CEO Michael Haft, citing persistent low foot traffic and other financial challenges post-pandemic, reported Restaurant Dive.

• Court records indicate about $11.7M owed to creditors and investors, with about 166 workers across its store footprint at the time of filing, according to the documents on PacerMonitor.

• Local reports list 10 specific cafe closures, including six in D.C., three in Northern Virginia, and one in Maryland, Patch.com reported.

• The Ivy City roasting facility, a key production hub, was closed as part of restructuring, according to WJLA.

Related: Iconic 118-year-old grocery chain shuts down its last store

This story was originally published by TheStreet on Feb 21, 2026, where it first appeared in the Restaurants section. Add TheStreet as a Preferred Source by clicking here.