Cerberus Capital Management LP will acquire Garden Fresh Restaurant Corp. out of bankruptcy, after two other buyers backed out of potential deals for the owner of Souplantation and Sweet Tomatoes, the operator said Monday.
Terms of the deal were not disclosed, but Cerberus was among several lenders to whom Garden Fresh owed more than $175 million, according to bankruptcy filings.
The sale to Cerberus, a distressed debt investor and private-equity firm, paves the way for Garden Fresh to emerge from bankruptcy “with between 90 and 104 restaurants.”
“This challenging, but necessary, process has created a stronger financial foundation,” John Morberg, Garden Fresh CEO, said in a statement. “Through our partnership with new owners, we plan to accelerate the guest-focused efforts we’ve been making to refresh our brands.”
Cerberus emerged as the likely buyer of Garden Fresh in November, after another lender, Cortland Capital, decided not to make a bid for the operator. Cortland had previously agreed to go into a sale process as a “stalking horse bidder,” meaning it would acquire Garden Fresh for a certain price if no other buyers emerged.
Cerberus stepped into Cortland’s place. According to bankruptcy documents, several potential bidders looked at the chain, and one potential buyer, Real Mex Restaurants, took an extensive look at the company. According to bankruptcy filings, Real Mex “performed extensive diligence,” including consulting with management and visiting facilities.
The company twice extended the deadline for bids, but none submitted a bid beyond what Cerberus was agreeing to pay for Garden Fresh.
Garden Fresh has been trying to find a buyer for months. A potential investor backed out of a deal for part of the company in August, which prompted its bankruptcy filing in October. Garden Fresh attributed the filing to declining sales and higher labor and rent costs following sale-leaseback deals to investors.
Garden Fresh is among several restaurant operators that filed for debt protection last year, following weak same-store sales and traffic industrywide. That group includes Cosi Inc., Don Pablo’s, Logan’s Roadhouse Inc., the owner of Fox & Hound and Champps, and Buffets LLC.
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