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UPDATE: Avado sells 83 restaurants

MADISON Ga. Avado Brands Inc., a casual-dining operator that has been under Chapter 11 bankruptcy protection since September, said it has agreed to sell 83 of its 111 Don Pablo's Mexican Restaurants and Hops Grillhouse and Brewery restaurants.

Terms were not disclosed for any of the seven pending transactions. A court hearing to approve the deals is scheduled for Dec. 10.

Sixty-seven of the restaurants and Avado’s headquarters here would be sold to an affiliate of the company’s primary bankruptcy lender, DDJ Capital Management LLC, according to a Monday filing with the U.S. Bankruptcy Court in Wilmington, Del. DDJ also agreed to purchase all property “used, useful or usable in the operation of the restaurants,” including intellectual property, and all materials and work related to Avado’s Pablo’s Fajita Grill, a fast-casual concept under development.

Nine Hops restaurants in Florida were sold to RREMC LLC/Steakhouse, a company whose line of business was not disclosed. This transaction also included RREMC’s purchase of an 18-month license for use of certain trade and service marks.

It was unclear if DDJ, RREMC and the other intended buyers plan to operate the restaurants under their current brand names or with the current management teams. But “because of the way the bid process has gone, we believe that most of the purchasers are interested in the brand,” said Paul Seidman, Avado’s senior vice president of marketing for food and beverage.

Avado chief executive Raymond “Rick” Barbrick said in a September statement that his management team “plans to remain ... and is confident in ... the strength of the Don Pablo’s and Hops restaurants.”

While there was no provision for management to stay with the restaurants after a sale, “it would make sense” that the new owners “will need a team already seasoned to the brands,” the company told Nation’s Restaurant News at the time of the bankruptcy filing.

Seidman noted that Avado is obliged by its agreement with the bankruptcy court to sell its remaining 28 restaurants.

The agreements already struck call for the sale of a Don Pablo’s restaurant to Chick-fil-A, the Atlanta-based quick-service chain, and another to a real estate company, Fair Lakes Center Associates LP.

Pine Trail Square LLC, a real estate company in West Palm Beach, Fla., agreed to purchase a Hops restaurant there. Real estate company Medlock Properties LLC intends to buy a Don Pablo’s in Jacksonville, Fla., and W. Cooper Enterprises LLC said it would purchase three Don Pablo’s units in Ohio, as well as certain of the sellers’ intellectual property, menu formats and recipes.

After Avado filed for Chapter 11 protection, DDJ provided a $67 million debtor-in-possession credit facility that allowed the company to continue operating its restaurants. At the time, Avado said it would sell the assets in an auction to “a better capitalized entity allowing for all of Avado’s restaurants to achieve their potential.”

This is the second time that Avado has voluntarily filed for bankruptcy. DDJ, a Wellesley, Mass.-based private-equity and debt-financing company, also helped Avado emerge from bankruptcy in 2005. DDJ reportedly owns all of Avado’s preferred stock, worth $23.7 million.

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