Atlanta-based Hooters of America announced Monday night that it had entered a restructuring support agreement to sell its remaining company-owned Hooters locations to a specific group of its current franchisees.
The group acquiring these locations includes two current prominent Hooters franchisees, one of which is Hooters Inc., the original owner. Together, they currently own and operate 30 percent of Hooters of America’s U.S.-based franchise locations.
In conjunction with this move, Hooters of America and 29 other Hooters-affiliated debtors also announced Monday night that they had voluntarily filed for Chapter 11 bankruptcy protection in the Northern District of Texas.
Ropes & Gray is serving as Hooters’ legal counsel in the cases, with a team that includes Ryan Preston Dahl (New York/Chicago), Chris L. Dickerson (Chicago), Rahmon J. Brown (Chicago) and Michael K. Wheat (Chicago). Foley & Lardner is representing Hooters in the bankruptcy case with a Dallas team that includes Holland N. O’Neil, Stephen A. Jones and Zachary C. Zahn.
“Our renowned Hooters restaurants are here to stay. Today’s announcement marks an important milestone in our efforts to reinforce Hooters’ financial foundation and continue delivering the guest-obsessed hospitality experience and delicious food our customers and communities have come to expect,” Sal Melilli, CEO of Hooters of America, said in a news release.
In its Chapter 11 filing, the company named over $50 million in liabilities, assets and more than 20 creditors.
The filing also revealed that the restaurant chain’s top creditors with unsecured claims come from a pair of its food and drink vendors in Florida-based Cheney Brothers ($1.86 million) and Fort Worth-based Ben E. Keith Company ($1.81 million).
New York’s Barstool Sports and North Carolina’s HMS Holdings are also listed among the top creditors with unsecured claims for previous marketing campaigns, with the company owing the two firms $1.23 million and $900,000, respectively.
Hooters expects the entire bankruptcy process to take between 90 and 120 days and intends to continue operating in both its domestic and global locations during the process. The company is seeking additional approval for $40 million in DIP financing from its existing lenders to support these operations.
Furthermore, after completing the Chapter 11 process and restructuring support agreement, all Hooters locations will now be franchisee-owned.
Hooters’ other advisors in the cases include SOLIC Capital Advisors as its investment banker, Accordion Partners as its financial and restructuring advisor and C Street Advisory Group as its strategic communications advisor.
Other legal firms and financial institutions advising in the cases include Morrison Foerster and North Point Mergers & Acquisitions, which advised the buyer group’s advisors on the deal. Additionally, Sidley Austin and Houlihan Lokey advised the prepetition term loan and DIP lenders and White & Case and M3 Partners advised the securitization noteholders in the cases.
The Morrison Foerster team included Benjamin Butterfield (New York), Chuck Cotter (Denver), Joseph Sulzbach (New York) and Matthew Ferry (San Diego).
The bankruptcy case has been assigned to Dallas-based bankruptcy judge Scott W. Everett, and the case number is Case No. 25-80078. The hearing on the debtors’ first motions is scheduled for April 2.