(Bloomberg) – American hotters filed for bankruptcy and became a casual dining brand known for their chicken wings and thin server uniforms, striving to attract customers.
The Atlanta-based company filed for Chapter 11 bankruptcy on Monday in the North District of Texas, court documents show. It lists assets of $50 million to $100 million in the same range as its petition.
High labor costs, competition from cheap fast food chains and the continuous decline in overall restaurant traffic have caused losses to casual restaurants. Seafood restaurant chain Red Lobster went bankrupt last year after a money-making “Endless Shrimp” promotion, while TGI Friday’s Inc. applied for Chapter 11 after working to reverse its business.
The company said in a press release Monday that it is seeking to approve $40 million in debtor financing from some of its existing lenders, including $35 million in new capital. This will provide the company with adequate liquidity to support operations in the Chapter 11 process, which is expected to continue until August, the statement said.
Neil Kiefer, CEO of the founder-owned division HMC Hospitality Group, told Bloomberg News in a recent interview that Hooters’ founders plan to make the chain more family-friendly to turn things around.
A turnaround plan will likely allow operators of HMC and other Hooters franchises to take over most areas currently owned and operated by U.S. Hooters, although some may close.
Hooters’ complex debt financing could be one of the wrinkles in the restructuring. Its bonds are packaged as enterprise-wide securitization, through which most of its assets (including concession fees) serve as collateral.
The bankruptcy case is the U.S. Hooters case in the U.S. Bankruptcy Court 25-80078 in the northern U.S. region.
– Assistance with Jonathan Randles.
(Details of debtor financing are provided in paragraph 4 and case number in the previous paragraph.)
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