The choppy seas of the restaurant industry have swamped another eatery in Joe’s Crab Shack, whose Houston-based parent company owes nearly $220,000 to a pair of high-powered, Atlanta-based labor and employment firms.
Ignite Restaurant Group Inc., owner of the popular seafood establishment and casual dining chain Brick House Tavern + Tap, filed for bankruptcy in Houston on June 6. The company lists about $153 million in assets against $197.3 million in liabilities in its Chapter 11 petition.
New Canaan, Connecticut-based venture capital firm J.H. Whitney & Co. owns Ignite, which is seeking bankruptcy court approval for a roughly $50 million sale of itself to KRG Acquisitions Co., an affiliate of San Diego-based private equity firm the Kelly Cos. Lawyers from Chicago’s Goldberg Kohn and Houston’s Okin Adams are representing the proposed buyers.
King & Spalding financial restructuring partners Edward Ripley in Houston and Sarah Borders in Atlanta are representing Ignite in its Chapter 11 case. The firm has not yet filed billing statements with the bankruptcy court.
The company operates 137 restaurants in 32 states, as well as three franchises in Dubai, and employs 8,400 people. But sales have declined in the U.S. restaurant sector due to the changing tastes and habits of customers, and Ignite’s ill-fated purchase of the Macaroni Grill chain in 2013 didn’t help its bottom line. Ignite began shuttering some weaker locations and eventually began pursuing a sale of the business, according to a bankruptcy court declaration by acting CEO Jonathan Tibus.
But as the company’s financial condition worsened, potential bidders withdrew their proposals, leaving Ignite with no other option except for bankruptcy. The debtor will now entertain offers from other interested buyers at a court-supervised auction slated for completion within 60 to 90 days.
According to a list of Ignite’s 30 largest unsecured creditors, the company owes $166,729.27 to Fisher & Phillips and $52,954.48 to Constangy, Brooks, Smith & Prophete. Lawyers at both firms who have done work for Ignite either did not respond or were unavailable when contacted for comment about the outstanding attorney fees.
Ignite’s bankruptcy comes at a time when restaurants across the country are facing financial hardships. In the last year, casual dining chains like Cosi Inc., Old Country Buffet and Roadhouse Holding—the owner of Logan’s Roadhouse—have all filed for bankruptcy. Others like Bob Evans and Ruby Tuesday have been forced to close locations.
Copyright The Am Law Daily. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.