TAMPA Fla. Shells Seafood Restaurants Inc. said it has filed for Chapter 11 bankruptcy protection and closed eight of its 23 restaurants. The move comes a few days after Shells reported that Warren R. Nelson had resigned as president and chief financial officer.
Shells said it would continue to operate the remaining 10 restaurants it owns. The company also noted that four Shells units that it manages but doesn't own and the new Rock Beach Grill unit, in which it has a partial interest, are not included in the bankruptcy filing.
Shells' chief executive, Marc Bernstein, said in a statement on Wednesday that the company's bankruptcy was due to general economic woes afflicting the restaurant industry, and he pointed to the recent bankruptcy filing by the parent of the Bennigan's and Steak and Ale chains as another casualty.
The eight units that Shells shuttered are in Ocala, Winter Park, Orlando, Kissimmee, Winter Haven, St. Petersburg, Holmes Beach and Fort Myers, Fla. Bernstein described the 10 remaining units that Shells owns and operates as having "the strongest historical performance or the greatest potential for the future."
Shells said it was seeking new financing but had not yet obtained any commitments. Court documents indicated that Shells’ liabilities as of June 30 totaled $10.2 million and that it held about $10.7 million in assets.
Shells has been struggling to maintain traffic and sales in the face of a downturn for much of the casual-dining sector. For its second quarter ended June 29, Shells posted a net loss of $667,000, or 3 cents a share, on revenues of around $8.9 million. That compares with a year-ago net loss of $1.1 million, or 6 cents a share, on revenues of $11.5 million. Same-store sales for the latest quarter fell 18 percent year-over-year, Shells reported.
In May, Shells agreed to exchange stock worth $108,000 for a one-year extension for the repayment of a $1.44 million loan from Trinad Capital LP, Fredrick R. Adler and Bruce Galloway IRA.
The company earlier had informed investors that it was striving to reduce its operating expenses through a menu repositioning and a reduction in administrative expenses.
Tampa-based Shells once operated as many as 39 units.