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Home News

Craig Provides $2MM DIP to Ruby’s Diner

byABF Journal Staff
September 6, 2018
in News

Ruby’s Diner, the operator and franchisor of multiple Ruby’s Diner restaurants across the nation, entered into a plan support agreement with businessman Steven L. Craig to support the company’s restructuring.

According to documents filed with the bankruptcy court, Craig has agreed to provide $2 million in debtor-in-possession financing.

Once implemented, the agreement will significantly reduce the company’s debt and strengthen its balance sheet allowing it to leverage a new strategic business plan leading to increased store sales and franchise growth. Craig owns multiple profitable Ruby’s franchises and is very familiar with the Ruby’s brand and operations.

“Ruby’s is excited about the next chapter in its evolution. The agreement and proposed equity infusion are strong endorsements of the Ruby’s brand,” said Doug Cavanaugh, CEO of Ruby’s. “Our restaurants are open and customers can continue to rely on Ruby’s for great food and excellent customer service. We will continue to sell and honor all customer gift cards and our Ruby’s Rewards program remains in place.”

In order to swiftly and efficiently restructure its financial obligations and to implement the agreement, the company filed a voluntary petition under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. Importantly, only certain wholly-owned restaurants are included in the proceedings: Ruby’s Huntington Beach, Ruby’s Laguna Hills, Ruby’s Oceanside and Ruby’s Palm Springs. Franchises and the remaining 28 Ruby’s restaurants are not included in the proceedings. The company intends to move through this process quickly, emerging in 120 to 180 days. This process should have little or no impact on employees, restaurants or franchisees.

The $2 million DIP financing commitment from Craig together with the company’s cash flow from operations should provide Ruby’s ample liquidity to meet all operating expenses and maintain normal operations. Assuming that the structure outlined in the agreement is implemented, Ruby’s will emerge from Chapter 11 with Craig owning 60% of the reorganized entity.

Newport Beach, CA-based Ruby’s Diner operates 32 stores across California, Nevada, Pennsylvania, New Jersey and Texas.

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