Two popular Louisville area restaurants may be forced to close their doors if, as has been whispered, their parent corporation decides to declare bankruptcy. The irony of the situation is the fact that both local restaurants appear to be doing well financially.
Joe’s Crab Shack, located on the Louisville waterfront, and the Brick House Tavern in nearby Plainview, are both owned by the Ignite Restaurant Group, Inc., which is based in Houston, TX. Joe’s Crab Shack is required to make monthly lease payments equal to 3.5% of its gross revenues, or about $160,000 per year, to the Louisville Waterfront Development Corporation. According to Development Corporation’s top financial officials, the restaurant’s payments have been “timely and consistent.”
Nevertheless, Bloomberg Media has reported that Ignite Restaurant Group’s revenues have fallen sharply and that the parent company was likely to file a business bankruptcy petition within one or two weeks. Ignite Restaurant’s corporate office was not making any public comments beyond its April announcement that it was pursuing “options.” The company has not revealed whether it intends merely to seek a debt reorganization under Chapter 11 or a complete dissolution under Chapter 7. The most likely outcome is that one or more equity buyers will purchase the firm out of bankruptcy. In the meantime, people who enjoy the company’s restaurants will be left to wonder about whether their favorites will survive.
This case demonstrates how a diversified corporation can face potentially terminal financial troubles even though one or more of its subsidiaries may be doing well. Any company facing similar difficulties may wish to seek advice from an experienced bankruptcy attorney. A lawyer who is knowledgeable about bankruptcy proceeding may be able to provide advice on whether to file a bankruptcy petition, whether to seek a reorganization or an outright dissolution, and how to navigate the choppy seas of the bankruptcy court.
Source: Louisville-Courier Journal, “Joe’s Crab Shack doing OK amid corporate bankruptcy reports,” Sheldon S. Shafre, May 9, 2017