Struggling Eagan buffet company files for bankruptcy
by Jessica Harper
Distressed Eagan restaurant company Buffets Inc. filed for Chapter 11 reorganization for the second time Jan. 16, but has said the company has already reached agreements with its creditors.
It also plans to close 81 underperforming restaurants, which is about 16 percent of its nationwide chain, as part of efforts to turn its financial situation around.
In the reorganization filing with the U.S. Bankruptcy Court in Delaware, Buffets said it has the “full support” of senior lenders who hold 83 percent of its debt for a plan that will erase all of the company’s estimated $245 million of debt and interest payments of $30 million.
The company expects it will be able to close the bankruptcy within six months, and existing lenders will receive 100 percent in new common stock.
Buffets is the largest steakhouse and buffet chain nationwide with 494 restaurants in 38 states.
It operates such restaurant chains as Old Country Buffet, HomeTown and Tahoe Joe’s Famous Steakhouse.
The company first filed for bankruptcy in early 2008 and emerged in 2009.
It was publicly traded until 2000 when it was purchased by New York private equity firm Caxton-Iselman, now CI Capital Partners, for $643 million, according to news reports.
In May, Buffets Inc. announced it was exploring a strategic alternative including a possible sale, according to a Star Tribune report.
That month, the company’s foreclosed 100,000-square-foot headquarters was auctioned and bought by Eagan pharmacy benefits manager Prime Therapeutics with the aid of a $500,000 forgivable loan from the state for creating jobs.
Buffets Inc. CEO Mike Andrews has said the company will try to renegotiate more favorable lease agreements.
The company has a $50 million loan from its existing lender, which in addition to available cash flow is expected to provide Buffets Inc. enough liquidity to operate during the restructuring process.
Jessica Harper is at firstname.lastname@example.org.