On Monday, August 8, 2016, Logan’s Roadhouse filed for Chapter 11 Bankruptcy protection. The Nashville based restaurant chain plans to restructure its operations and close 18 under performing locations. The locations of the store closures was not announced, but Logan’s only have one Knoxville, TN area restaurant located in Sevierville, TN.
Under Performing Restaurants
The move to close the under performing restaurants is part of an overall strategy to improve the company’s financial performance. The company said a plan is in place to assist employees in closing restaurants, reassigning employees to other Logan’s restaurants and providing them with outplacement services and assistance with applying for jobs.
The company’s CEO Sam Borgese will be stepping down effective immediately as well. Borgese was named CEO in October 2014.
While the chain is headquartered in Nashville, the company filed for Chapter 11 bankruptcy protection in Delaware, where it is incorporated. The parent company of the steakhouse chain has secured $25 million in bankruptcy financing for its restructuring plan, court records show. The bankruptcy filing comes after comes after a tough first half of 2016 for the chain which saw traffic fell by 8.8 percent and sales fell by 4 percent.
Logan’s has entered into a restructuring agreement with lenders and holders of more than 83.9 percent of about $378 million in notes that will reduce debt by over $300 million, Keith Maib, chief restructuring officer, said in court papers. The agreement also includes exit financing, Maib said.
The chain has about 250 restaurants in 50 states with 18,964 employees, including 1,002 full-time workers and more than 25 stores in Tennessee.
Founded in Lexington, Ky., in 1991, Logan’s was purchased by Lebanon, Tenn.-based Cracker Barrel Old Country Stores in 1999, and the parent company became known as CBRL Group, Inc.
CBRL sold the Logan’s chain to a private equity firm in 2006, and it was sold in 2010 to Kelso & Company, another private equity firm. It’s now part of LRI Holdings, Inc., which operates as a subsidiary of Roadhouse Parent Inc., under mostly Kelso’s ownership.
As of Oct. 28, Logan’s had $12.9 million in cash and $525.4 million in liabilities.
The company said in a June 30 filing with the Securities and Exchange Commission that is was “engaged in discussions with (creditors) regarding strategic alternatives to reduce … indebtedness and improve liquidity.”
Don Lawson is the Office Manager of the Bond & Botes Law Offices location in Knoxville, Tennessee. He holds degrees in both Accounting and Finance that he’s put to use analyzing complex business bankruptcy cases for the firm. Read his full bio here.