Houlihan’s chain files for bankruptcy
The private-equity backed operator of the Houlihan’s Restaurant + Bar chain has filed for bankruptcy protection with a deal in hand to sell the casual dining chain to fellow restaurant operator Landry’s Inc. for $40 million and assumption of some liabilities.
Houlihan’s Restaurant Inc. and its affiliates blamed Thursday’s Chapter 11 filing on a confluence of factors that have stressed the casual dining sector in recent years including expensive leases, a tight labor market and “the rapid growth in costly third-party delivery.” The bankruptcy comes little more than a year after the business acquired more than a dozen Houlihan’s locations from its largest franchisee.
Private-equity firm York Capital Management and Mike Archer, a former president of Applebees and TGI Friday’s, acquired Houlihan’s in 2015. Houlihan’s has almost $80 million in assets and $76.9 million of liabilities, consisting mostly of debt, according to court papers filed in the U.S. Bankruptcy Court in Wilmington, Del.
Landry’s owns Bubba Gump Shrimp Co., Morton’s The Steakhouse, Joe’s Crab Shack and numerous other casual dining chains. In August, Landry’s made an offer in bankruptcy to acquire the assets of Restaurants Unlimited Inc. Landry’s is owned by billionaire Tilman Fertitta, who also owns the National Basketball Association’s Houston Rockets.
The bankruptcy and the sale process aren’t expected to interrupt business at Houlihan’s or its other branded restaurants.
Houlihan’s has lined up a $5 million bankruptcy loan to fund the business during the Chapter 11 and filed customary motions to keep paying wages, utilities and other ordinary expenses during the case. The loan, which must be approved by a judge, has a Dec. 20 deadline for getting court approval of the proposed sale.
“We expect the process to be seamless for our guests, team members and vendors and look forward to continuing to provide our guests with the same great experience they expect when they dine with us,” Archer said.
The company owns operates 47 restaurants in 14 states, not including more than 20 other Houlihan’s outlets owned by franchisees. The business has about 3,450 salaried and part-time employees and also owns the J. Gilbert’s Wood-Fired Steak + Seafood, Bristol Seafood Grill and Devon Seafood Grill restaurants.
Houlihan’s has lined up a $5 million bankruptcy loan to fund the business during Chapter 11. Pictured, a Houlihan’s in Columbia, Md.