The parent company of Hooters and its affiliates sought bankruptcy protection in a move expected to aid the sale of its U.S. corporate-owned restaurants to a franchisee group and eliminate debt.
Hooters of America LLC and its various affiliates filed for Chapter 11 in a Texas court with plans to sell more than 100 of its company-owned restaurants to two franchisees, according to a statement. The buyer group includes Hooters Inc., led by the brand's original founders, and Hoot Owl Restaurants.
Hooters of America has 151 company-owned restaurants in 22 states that generated $358.9 million of revenue in fiscal year 2024, according to a declaration from Keith Maib, chief restructuring officer for Hooters of America, that was filed with the bankruptcy court.
The sale of the company-owned locations is expected to help Hooters of America pay down nearly $376 million in debt, the filing said.
The bankruptcy filing does not impact Hooters' franchised locations in the United States or throughout the world. Hooters has 154 franchised restaurants across the globe.
Hooters of America expects to emerge from Chapter 11 protection in the next 90 to 120 days under a pure franchise business model. Restaurants are expected to remain open during bankruptcy proceedings. The company's key stakeholders plan to exchange their debt for equity in Hooters of America, according to the statement.
Hooters was purchased by private equity firms TriArtisan Capital Advisors and Nord Bay Capital in 2019. TriArtisan also has ownership stakes in TGI Fridays, which is selling off real estate to franchisees in its bankruptcy proceedings.
The proposed buyers of Hooters' corporate-owned locations — Hooters Inc. and Hoot Owl Restaurants — own and operate over 30% of Hooters' franchised U.S. locations, including 14 of the 30 highest-volume restaurants, company officials said in a statement.
Hooters Inc.'s leadership team includes several people who were among the founders of Hooters as a beachside diner in Florida in 1983 before it went national.
After the restructuring is complete, "the Hooters brand will once again be in the hands of highly experienced Hooters franchisees and we will be well-positioned to return this iconic brand to its historic success," said Neil Kiefer, CEO of Hooters Inc., in the statement.
The buying group expects to own and operate about 70% of Hooters' domestic locations if the deal closes.
Hooters' operations are expected to be funded with $40 million of debtor-in-possession financing from some of its existing lenders, including $35 million of new capital. The financing is subject to a judge's approval in the North Texas Bankruptcy Court in Dallas, with a first-day hearing scheduled for Wednesday.
Hooters of America said it is evaluating the company's operational footprint as part of its financial restructuring process to position it to invest its resources in its strongest assets. Hooters of America did not respond to an email request for more information from CoStar News.
For the record
North Point Mergers & Acquisitions is representing the buying group, with Morrison & Foerster LLP serving as legal counsel. Hooters of America's legal counsel is Ropes & Gray LLP, and its investment banker is Solic Capital Advisors. Accordion Partners is Hooters of America's financial and restructuring adviser, and C Street Advisory Group is the firm's communications adviser. The prepetition term loan and debtor-in-possession lenders' legal counsel is Sidley Austin LLP, and Houlihan Lokey is serving as the investment banker. White & Case LLP is the legal counsel on behalf of the ad hoc group of securitization noteholders, with M3 Partners LP serving as the financial adviser.