Luby’s Inc. is charting its path for winding down operations and dissolving its cafeteria, Fuddruckers and contract services holdings, according to end-of-year federal filings.
Shareholders of Houston-based Luby’s on Nov. 17 voted overwhelmingly to proceed with the company’s plan to liquidate its assets.
“The company intends to attempt to convert all of its assets into cash, satisfy or resolve its remaining liabilities and obligations, including contingent liabilities and claims and costs associated with the liquidation of the company, and then file a certificate of dissolution,” Luby’s said Wednesday in its annual filings with the Securities and Exchange Commission.
Assets to be sold include the operating divisions — Luby’s Cafeterias, Fuddruckers and the company’s Culinary Contract Services business — as well as the company’s real estate, the company said.
As of Nov. 24, Luby’s operated 84 restaurants, including five side-by-side Fuddruckers-Luby’s “combo” locations. Of the 79 real estate parcels, 47 are company-owned and 32 are leased.
“The company currently anticipates that its common stock will be delisted from the NYSE upon the filing of the certificate of dissolution, which is not expected to occur until the earlier of the completion of the asset sales or three years, but the delisting of its common stock may occur sooner in accordance with applicable rules of the NYSE,” Luby’s noted.
For the fiscal 2020 year ended Aug. 26, Luby’s reported its net loss widened to $29.4 million, or 97 cents a share, from $15.2 million, or 51 cents a share, in the prior year. Sales in the year were $214 million, down from $323.5 million in the prior-year period.
Luby’s ended the fiscal year on Aug. 28 with 85 company restaurants, including 61 Luby’s Cafeterias and 24 Fuddrucker’s. During the year, it closed 39 restaurants, including 18 Luby’s, 20 Fuddruckers and the one last Cheeseburger in Paradise. The company also franchises more than 100 Fuddruckers units.
Luby’s also noted that it may be subject to audit from its $10 million Paycheck Protection Program loan, which it procured through Texas Capital Bank on April 21 as part of the federal Coronavirus Aid, Relief, and Economic Security (or CARES) Act.
“We have incurred indebtedness under the CARES Act which may be subject to audit, may not be forgivable and may eventually have to be repaid,” Luby’s warned in its filing Wednesday. “Any repayment of such indebtedness may limit the funds available to us and may restrict our flexibility in operating our business or otherwise adversely affect our net assets and liabilities in liquidation.”
The U.S. Treasury Department has said it will conduct audits for PPP loans that exceed $2 million. On Nov. 12, Luby’s applied for forgiveness of the entire amount due on its loan.
“The company cannot provide assurance that the principal and interest amounts under the PPP Loan will be forgiven,” Luby’s said. “If all or substantially all of the PPP Loan is not forgiven or it is subsequently determined that it must be repaid, we may be required to use a substantial portion of our cash flows from operations or proceeds from the sale of our assets to pay interest and principal on the PPP loan.”
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