HRI Holding Corp., the parent company of casual-dining chain Houlihan’s Restaurants, has filed for Chapter 11 bankruptcy protection as part of an initial sales agreement to Tilman Fertitta’s Landry’s LLC for $40 million in cash.
According to filings by HRI and 38 affiliate companies with the U.S. Bankruptcy Court for the District of Delaware, Landry’s is the “stalking horse bidder,” or the company that sets the minimum bidding price, for Houlihan’s, which operates 47 restaurants in 14 states. That includes 34 Houlihan’s units, six J. Gilbert’s restaurants, three Bristol Seafood Grill restaurants and three Devon Seafood Grill locations.”
It franchises an additional 21 Houlihan’s locations, which are not included in the bankruptcy, according to Nation’s Restaurant News Top 200 data. Houlihan’s parent company reported revenue of $202 million for fiscal 2019 with earnings of around $9 million.
Its largest creditors are distributors U.S. Foods Inc., which is owed just under $960,000, and Sysco Food Services LLC — Metro NY, which is owed just over $630,000.
According to the bankruptcy filing, Houlihan’s “began exploring their strategic options to sell all or substantially all of the Company’s capital stock, assets, and/or business” in early spring, and retained Piper Jaffray & Co. to evaluate operations and present alternatives.
They selected Landry’s as their stalking horse bidder on Nov. 12.
“In light of the continued deterioration of the Debtors’ cash position and present lack of realistic stand-alone restructuring options, the Debtors, in the exercise of their reasonable business judgment, determined that the most effective way to maximize the value of the Debtors’ estates for the benefit of their stakeholders was to seek bankruptcy protection in order to sell substantially all of their assets,” according to the filing.
It said that the only alternative to the sale would be filing for Chapter 7 bankruptcy and “piecemeal liquidation of the Debtors’ assets, which would result in less value to the Debtors’ stakeholders, in addition to a loss of their operating businesses and a termination of thousands of employees’ jobs.”
HRI Holding Corp. has around 3,450 employees, according to the filing.
Restaurant brands already operated by Landry’s include Landry's Seafood, Chart House, Saltgrass Steak House, Bubba Gump Shrimp Co., Claim Jumper, Morton's The Steakhouse, McCormick & Schmick's, Mastro's Restaurants and Rainforest Café.
In September Landry’s agreed to buy Restaurants Unlimited, as well as Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille.
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