MADISON Ga. Avado Brands Inc., parent company of the 91-unit Don Pablo’s and 22-unit Hops Grill & Brewery casual-dining chains, said Thursday that it has filed for Chapter 11 bankruptcy protection and will seek to sell its assets.
This is the second time that Avado has voluntarily filed for bankruptcy, following a February 2004 filing from which it emerged in May 2005. The company said it would sell its assets in an auction to “a better capitalized entity allowing for all of Avado’s restaurants to achieve their potential.”
Avado also said it has arranged and is seeking court approval for a $67 million debtor-in-possession credit facility from a group of lenders led by DDJ Capital Management LLC that would allow the company to continue operating its restaurants.
“We remain committed to our guests, our team members and our investors, and we intend to carry on,” chief financial officer Kurt Schnaubelt told Nation’s Restaurant News. “This is not a great day for us, but sometimes when you are in business you have to use the tools out there to do what you have to do.”
Schnaubelt said he would not discount negative pressures of the economy as a cause for the bankruptcy. He added that the company had not yet discussed the closures of any restaurants.
Avado’s latest bankruptcy filing in the U.S. Bankruptcy Court for the District of Delaware pegs its liabilities between $1 million and $100 million. A creditors meeting is scheduled for today, and Avado said it hopes to move quickly through the bankruptcy process.
According to bankruptcy filings, Avado generated estimated revenue of $227.8 million for the 12 months ended July 31, and a loss of $7.8 million before interest, tax, depreciation and amortization.
Paul Seidman, Avado’s senior vice president and director of marketing, told Nation’s Restaurant News that the company’s previous bankruptcy, which took more than a year to complete, was handled under a different management team.
He said he expects Avado’s restaurants to operate as usual, no matter what entity eventually buys the company.
“While there is no provision for the assumption of management, it would make sense that with 91 Don Pablo’s and 22 Hops restaurants the new owners will need a team already seasoned to the brands,” he said.
Avado’s chief executive Raymond “Rick” Barbrick echoed that sentiment in a company statement.
“The management team plans to remain with the company and is confident in the future of Avado Brands and the strength of the Don Pablo’s and Hops restaurants,” Barbrick said in the statement.