The American Hooters Restaurant Network has been bankrupt, amid the difficulties of the casual restaurant chain – known for its chicken wings and the provocative uniforms of its attendants – to attract customers.
The company, based in Atlanta, filed its request for judicial recovery based on Chapter 11 of the US Bankruptcy Law in the Northern District Court of Texas, according to judicial documents released on Monday (31). The company declared assets between $ 50 million and $ 100 million, with liabilities in the same range.
The casual restaurant sector has been pressured by high labor costs, cheaper fast food chains and drop in client volume. The Red Lobster Sea Fruit Network, for example, declared bankruptcy last year after damage to a “shrimp at ease” promotion, while TGI Friday’s Inc. also resorted to chapter 11 following failed attempts at recovery.
Hooters seeks approval for a $ 40 million financing in the “Debtor-In-Possion” (DIP) modality from some of its current creditors, including US $ 35 million in new capital, according to the company’s statement. The resources aim to ensure sufficient liquidity to maintain operations during the restructuring process, which should extend to August.
According to Neil Kiefer, CEO of HMC Hospitality Group – a unit controlled by Hooters founders – the restructuring plan includes making the brand more focused on family audiences, as Bloomberg News told a recent interview.
The proposal involves HMC and other franchise operators assume most units in the US currently under direct Hooters of America management, although some can be closed.
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The company’s complex financing structure can represent an additional challenge in restructuring. Hooters titles are structured as “integrated business securitizations”, where the company offers as a guarantee of much of its assets, including franchise rates.
The bankruptcy process is registered under the name Hooters of America LLC, 25-80078, at the US Bankruptcy Court for the northern district of Texas.
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