Many of the restaurant industry bankruptcy cases will be bearing fruit this fall.
Orlando, Fla.-based Red Lobster, which filed for Chapter 11 bankruptcy protection in May and has closed more than 100 restaurants, is scheduled for a hearing Thursday to exit Chapter 11.
Damola Adamolekun will be Red Lobster’s CEO if its sale to an affiliate of Fortress Capital goes through, Fortress said.
Adamolekun’s appointment and the chain’s sale require court approval in the ongoing reorganization following its filing for Chapter 11 bankruptcy protection.
Bradford Sandler, co-chair of Pachulski Stang Ziahl & Jones’ committee practice group, said: “This year has seen a lot of restaurant bankruptcies, including Red Lobster, Rubio’s, and Buca di Beppo, among others
“Now BurgerFi, which went through a de-SPAC transaction, has issued a going concern warning due to liquidity concerns,” Sandler said. “BurgerFi’s liquidity issues are not uncommon to those issues facing the industry in general, such as rising commodity prices, reduced demand, and higher labor costs.”
Bankruptcy protection does offer opportunities, he added.
“While a restaurant does not age well in bankruptcy, it does provide an opportunity for the restaurant to right-size its capital structure, more easily close unprofitable locations, and make operational adjustments with its vendor community that it may not be able to do outside of bankruptcy,” Sandler said. “If management, with the support of its equity sponsor or senior lender, is willing to make the tough choices in bankruptcy, the restaurant can emerge a stronger and better business for all of its stakeholders.”
Pachulski has offices in Los Angeles, San Francisco, New York, Delaware and Houston.
Here’s an update on filings from Buca Di Beppo Italian Restaurants to World of Beer.
Buca Di Beppo
In August, Orlando, Fla.-based Buca di Beppo, an Italian full-service concept founded in 1993, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Texas.
This filing came about a week after the chain abruptly closed more than a dozen locations, leaving 44 locations across 14 states and two international locations within the system.
Rubio’s
In June, less than a week after closing nearly 50 California locations, Rubio’s Coastal Grill filed for Chapter 11 bankruptcy protection.
The San Diego, Calif.-based fast-casual company said it was pursuing protection to facilitate the sale of the 41-year-old business, adding that its remaining 86 locations in California, Arizona, and Nevada would continue to operate as is.
In August, it sold to it lender, The Original Fish Taco LLFC, an affiliate of the TREW Capital Management restaurant investment firm, in an uncontested bid for $40 million.
Tijuana Flats
In June, Tijuana Flats, the fast-casual Mexican restaurant chain, named James Greco as CEO to lead the brand through its restructuring and turnaround,
The Maitland, Fla.-based concept, which filed for Chapter 11 bankruptcy protection and closed units in April, said Greco previously led Bruegger’s Enterprises Inc. and Sbarro as CEO. He succeeds Joe Christina in the CEO role.
Rōti
Rōti Modern Mediterranean is seeking to reorganize after filing for Chapter 11 bankruptcy protection in late August, the company said.
The Chicago-based fast-casual company, which has closed restaurants since the 2020-declared pandemic, has 19 restaurants in three states and the District of Columbia.
Tender Greens
Southern California-based salad and bowls concept, Tender Greens, and its parent company, One Table Restaurant Brands (also parent company to fast-casual Mexican chain, Tocaya), filed for Chapter 11 bankruptcy protection on July 17 and July 18, respectively.
Together, Tender Greens and Tocaya operate about 40 locations, mostly in California. According to bankruptcy documents, the Los Angeles-based One Table Restaurant Brands has an estimated $10 million to $50 million of liabilities, with under $50,000 of assets, and is considering a sale in the form of an auction or stalking horse bidder.
World of Beer
In August, Tampa, Fla.-based World of Beer Bar & Kitchen filed for Chapter 11 bankruptcy protection, with several company affiliates filing in the U.S. District Court for the Middle District of Florida, as well as World of Beer Holdings, World of Beer Inc., and World of Beer Franchising LLC.
The company reported assets of $10 million to $50 million, liabilities of $10 million to $50 million, and 49 or fewer creditors.
The filings also included Melt Bar & Grilled, Sticky Fingers, Boxer Ramen, Oberweis Dairy, Foxtrot/Dom’s Kitchen, and Pizza Hut franchisee EYM.
Contact Ron Ruggless at [email protected]
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