Max & Erma's will be purchased out of bankruptcy in a deal valued at $24.6 million in cash and assumed debt, according to a reorganization plan filed Friday with the U.S. Bankruptcy Court in Pittsburgh.
Under the plan, which still must be approved by the court, “substantially all” of the casual-dining chain's assets will be sold to Concept Development Partners, which is controlled by CIC II LP of Dallas and CDP Management Partners, based in Malibu, Calif.
Concept Development Partners will manage more than 75 percent of the chain's corporate stores, according to court documents. At the end of 2009, Columbus, Ohio-based Max & Erma’s operated 68 corporate restaurants and franchised an additional 28 units.
The chain filed for Chapter 11 bankruptcy protection last October, which was followed days later by a Chapter 11 filing of sister chain Damon's Grill. Both chains were owned by Pittsburgh-based G&R Acquisition Inc., which is led by restaurateur Gary Reinert.
Damon's was not included in the plans for Concept Development Partners to acquire Max & Erma's.
Reinert purchased Max & Erma’s for about $10 million in 2008. At the time of the deal, Max & Erma’s had defaulted on a $23 million loan, a representative for Reinert told Nation's Restaurant News, and Reinert had planned to pay off the debt by selling corporate units to franchisees. Those plans fell through as tightening credit meant those franchisees could no longer secure financing to complete the purchases.
Reinert was removed from day-to-day operations in January, when creditors put Mark Roberts of Alvarez & Mars North America of Vienna, Va., in charge as chief executive and chief restructuring officer.
Max & Erma’s estimated systemwide sales totaled $210 million in 2009, a 9.7-percent drop from estimated systemwide sales of $232.5 million in 2008, when the system totaled 107 restaurants.
Contact Bret Thorn at [email protected].