MADISON Ga. Bankrupt Avado Brands Inc. has completed the sale of 41 Don Pablo’s restaurants and seven Hops brewpubs to Rita Restaurant Corp., the newly formed operating company of Avado lender DDJ Capital Management LLC. The terms were not disclosed.
The new owner said it is looking at the possibility of franchising the brands.
Members of Avado’s management have apparently moved to Rita, which indicated that it would continue to operate the outlets under their current chain identities. Paul Seidman, who was Avado's senior vice president of marketing, is serving as chief operating officer of Rita, and Kurt Schnaubelt has been named chief financial officer. David Barr was appointed Rita’s chairman. In total, 2,000 Avado employees, including restaurant-level workers, moved to Rita.
“We want to thank all the employees of Don Pablo’s, Hops and Avado who are joining Rita Restaurant Corp. through the acquisition,” Seidman said in a statement. “We believe in the brands and the people.”
The sale, announced last November, is part of Avado’s liquidation under bankruptcy court supervision. Avado has been selling its 111 restaurants piecemeal. The Rita deal completes the divestiture.
DDJ, a hedge fund, reportedly led a group of investors in loaning Avado $67 million to keep the company operating during its bankruptcy. News reports indicated that the fund and its affiliates already owned all of Avado’s preferred stock.
When it filed for bankruptcy last September, Avado operated 91 Don Pablo’s casual Mexican restaurants and 22 Hops brewpubs.