Hooters announced on Monday that it has filed for Chapter 11 bankruptcy — but that doesn’t necessarily mean it’s going out of business.
In a press release published on Monday night, the iconic restaurant chain explained that it had entered into a restructuring support agreement (RSA) with “near unanimous support from its key stakeholders.” Chapter 11 bankruptcy protection allows businesses to restructure their debts while they continue to operate.
The deal is intended to “effectuate a sale transaction that will facilitate the continued operation of the business under new ownership.”
“Specifically, the Company has reached an agreement in principle with a highly experienced group of current franchisees (the “Buyer Group”) to acquire and operate certain Company-owned Hooters locations,” Hooters described.
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“The Buyer Group is comprised of two existing Hooters franchisees (including Hooters Inc., the original Hooters founders), who collectively currently own and operate over 30% of the domestic franchised Hooters locations, including 14 of the 30 highest volume restaurants.”
The news comes over a month after reports broke back in February that Hooters was considering filing for bankruptcy. Bloomberg cited debt, liquidity problems and fewer customers as key reasons for the move.
In Monday’s press release, Hooters of America CEO Sal Melilli promised that 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,” Melilli’s statement read.
“I’ve seen firsthand the incredible value and opportunities our brand brings to life, and I look forward to continuing that momentum well into the future.”
Hooters added that it will remain open to serve customers, and restaurants will “continue to operate in a business-as-usual manner during its Chapter 11 cases.”
“As part of the Company’s broader business transformation and planning, Hooters is evaluating the Company’s operational footprint as part of its financial restructuring process to position itself to invest its resources in its strongest assets moving forward,” the statement added. “The Company’s current franchise operations, including its locations outside the U.S., are not impacted by the Chapter 11 process and will continue to be operated by the Company’s franchise and license partners.”
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