American Blue Ribbon Holdings filed a petition for voluntary Chapter 11 reorganization with the U.S. Bankruptcy Court of Delaware.
Once approved by the Court, this filing will allow the company to continue operation of its businesses and service to its customers in the ordinary course while it works through the important elements of a plan of reorganization. The company has arranged debtor-in-possession financing of $20 million from Cannae Holdings, its majority equity owner, in support of the filing and plan of reorganization.
The filing by the company does not involve or affect the operations of O’Charley’s or 99 Restaurants, which are not part of American Blue Ribbon Holdings. Fidelity Newport Holdings owns ABRH, LLC which owns the company. Both FNH and ABRH will continue operating in the ordinary course and are not parties to the filing.
The company believes the reorganization will facilitate the company’s Village Inn and Bakers Square restaurant brands evolution to a healthy core of restaurants and support an approach to the brands that is most beneficial for all stakeholders. As part of the reorganization, the Company will explore a variety of strategic and structural initiatives to best position the Company for success in the future.
Legendary Baking, owned by the company, will continue its current operations in the ordinary course.
The company’s financial trends have been negative since 2017 as the restaurant operations struggled with declining sales and acceptable margins. Those challenges are similar to others in the industry particularly as it relates to higher wage rates. During 2018, a potential transaction to separate the company’s businesses from existing equity ownership was proposed but did not ultimately occur after considerable effort. At that point in the third quarter of 2018, both the restaurant brands and Legendary Baking had new leadership designated to address the performance shortfalls.
While new leadership substantially improved the performance of the Company’s businesses with a reduction of its losses by over third, with most of the improvement coming from Legendary Baking, the expectations for 2020 were continued losses for the company. ABRH and other non-debtor affiliate companies are no longer willing to fund the company’s operations which led to the filing.
Accordingly, the company filed the bankruptcy and closed 33 underperforming stores; obtained post-petition financing that will provide sufficient liquidity for the Company to fund operations during the case; and will explore its strategic options to create a healthy foundation for optimizing the performance of the businesses while under the protection of the Bankruptcy Code.
