#Chuck E. Cheese wants to destroy 7 billion prize tickets amid bankruptcy

The ultimate Chuck E. Cheese motherlode could be headed for the shredder.

The kid-friendly arcade’s parent company wants to destroy about 7 billion prize tickets that have piled up in its supply chain so they don’t fall into the hands of greedy gamers.

The company, CEC Entertainment, says its need for the tickets — which players win from games and exchange for prizes — diminished as the coronavirus pandemic tanked its sales and temporarily closed its arcades.

The massive stockpile could be traded in for about $9 million worth of prize merchandise — or $0.0013 per ticket — if they were abandoned and snapped up by potential customers, according to the company.

“Since prize tickets are redeemable by guests at significantly higher value than the cost of prize tickets, the debtors instead need to arrange for the destruction of the remaining stock of prize tickets in the supply chain to mitigate any risk of these tickets being circulated to the general public,” James A. Howell, CEC’s chief financial officer, said in a Monday court filing.

The industry’s “rapid move toward contactless service” amid the COVID-19 pandemic accelerated CEC’s efforts to phase out the paper tickets, along with the “muncher” machines that count them, in favor of electronic tickets, the company said.

But CEC had placed orders for tickets based on how many it had needed before the virus hit, causing “enough tickets to fill approximately 65 40-foot cargo shipping containers” to build up in the supply chain, according to the filing.

CEC asked a Texas bankruptcy court to approve settlements allowing three of its vendors to scrap the excess tickets at a cost of about $2.3 million, roughly $1 million less than the cost of circulating them.

The company also got assurances through its negotiations with vendors that the tickets would not be circulated to the general public, according to the court filing.

But there are still more tickets at CEC’s “various venues and held in storage or at other locations that will also need to be destroyed,” the company said.

CEC Entertainment filed for bankruptcy in June, saying it planned to restructure its debt-heavy balance sheet through talks with financial stakeholders and landlords as it plotted a recovery from the COVID-19 crisis.

The Texas-based company has more than 600 Chuck E. Cheese locations and more than 120 Peter Piper Pizza restaurants, including franchises, across 47 states and 16 foreign countries and territories.