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Tully's Coffee parent declares bankruptcy

PRNewsFoto/International Pape/AP

NEW YORK The parent company of Tully's Coffee has filed for Chapter 11 bankruptcy protection and will close nine stores this Sunday.

The Seattle-based coffee chain has long struggled under the shadow of Starbucks (SBUX).

TC Global filed for bankruptcy protection Wednesday to help eliminate some costs that are keeping the company from being profitable.

It said it is struggling with lease obligations, commodity costs and underperforming stores. The company has more than $3.7 million in debt, according to its court filing.

A hearing is set for Friday in U.S. Bankruptcy Court for the Western District of Washington in Seattle.

Tully's opened its first store in 1992. It sealed a marketing deal with the San Francisco Giants in 2000 for $1.8 million. Tully's has shops in Arizona, California, Colorado, Idaho, Montana, Oregon and Washington.

After Sunday, 48 company-run stores will remain. Of the 115 employees of stores that are closing, 108 have been offered jobs at other locations, said spokeswoman Heidi Happonen.

There are also 83 franchised or licensed Tully's locations in the U.S. as well as locations in Asia.

The company expects to emerge from bankruptcy protection sometime in 2013.