Landry’s in bankruptcy bidding for Joe’s Crab Shack, Brick House Tavern + Tap
.svg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale "Nation's Restaurant News")
Ignite Restaurant Group Inc. warned that it may lay off as many as 87 employees at its corporate headquarters as the parent to Joe’s Crab Shack and Brick House Tavern Tap continues Chapter 11 bankruptcy proceedings.
The Houston-based casual-dining operator has also gained a second suitor, with the bankruptcy court receiving a competing $55 million bid from Houston-based Landry’s Inc.
Ignite filed for federal bankruptcy protection on June 6, saying it had a $50 million “stalking horse” bid with the San Diego-based private-equity firm Kelly Investment Group, which acquired Champps and Fox & Hound out of bankruptcy last year.
Late last week, Ignite filed a Worker Adjustment and Retraining Notification (WARN) Act letter with the Texas Workforce Commission, warning of possible corporate layoffs.
The company said it could begin cutting jobs at its headquarters as early as Aug. 22, but if a sale goes through, a new owner might keep some of those workers.
“While we expect that the prospective buyer of Ignite’s assets may want to hire many of Ignite’s employees, we cannot guarantee it. That decision will be up to the buyer,” the company said in its WARN letter.
“It is also possible that the sale will not be completed, in which case Ignite’s future will be uncertain, and we cannot guarantee the future employment of Ignite’s employees,” the letter continued.
The U.S. Bankruptcy Court in Houston is considering Ignite’s reorganization, which is allowing bids other than KRG’s through the court-supervised auction.
Landry’s said this week that it had offered $55 million, including a $10 million good-faith deposit. Landry’s also said it would match all the other terms of KRG’s agreement “other than the ‘no shop’ provision, which Landry’s believes is unenforceable.”
No deadline has been set on the auction process, which is being overseen by Piper Jaffray & Co. Earlier this year, before the bankruptcy filing, Ignite had engaged Piper Jaffray for a possible sale.
Jonathan Tibus, Ignite CEO, said Wednesday that the auction is expected in August. Landry’s and Kelly have rights to a $1.5 million breakup fee if they do not win the bid, he said, or it will be split if neither party wins the bid.
As of April 3, Ignite operated 112 Joe’s Crab Shack restaurants and 25 Brick House restaurants in 32 states, and franchised three Joe’s Crab Shack restaurants in Dubai.
Jonathan Maze, Nation’s Restaurant News senior finance editor, contributed to this report.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
