F&H Acquisition Corp., parent to the Fox & Hound sports bar and Champps casual-dining chains, filed for Chapter 11 bankruptcy protection Sunday.
Wichita, Kan.-based F&H, which also owns the Bailey’s Sports Grille brand, blamed continuing effects of the recession and poor sales for the filing.
“This difficult decision, which has the support and participation of our senior lenders, is the best and quickest option to restructure our finances, minimize disruption to our restaurants and fully implement our ongoing turnaround plan,” F&H spokesman Rick Van Warner wrote in an emailed statement.
The company owns and operates 101 full-service restaurants, including 50 Fox & Hound units, 35 Champps locations and 16 Bailey’s outlets, and it also franchises 11 Champps restaurants.
In its Chapter 11 filing, the company listed debt of about $119 million, including $68.4 million in first-lien secured loans; $39.8 million in second-lien secured loans; and $11.2 million to landlords, trade vendors and other unsecured creditors.
Senior creditors have agreed to provide a $9.6 million loan and $3.3 million in letters of credit for operations during the bankruptcy proceedings, F&H told the U.S. Bankruptcy Court in Wilmington, Del. In an undefined period before the bankruptcy filing, F&H had closed about 24 restaurants, the company told the court.
James Zielke, F&H’s chief financial officer, said in filings that “the recession has been a primary factor in the decline in the debtors’ sales, as consumers prioritized the savings of dining at home over eating out.”
The company said in filings that it had revenue of more than $218 million through September, a 5-percent dip from the same period last year.
“Most restaurants generate meaningful cash flow and guests are responding positively to our remodel program and other changes our new leadership team is making,” Van Warner added in his statement.
Former chief executive Steve Johnson left the company in October 2012 and was succeeded in January by current chief executive Marc Buehler. Van Warner said in a phone interview that Buehler has subsequently made a number of management changes.
F&H Acquisition Corp. bought the 61-unit Champps Entertainment Inc. chain for $74.8 million in October 2007. F&H’s equity sponsors in the buyout were Newcastle Partners LP, Newcastle Special Opportunity Fund II LP and Steel Partners II LP.