Avado Brands Inc. has sold 83 of its Don Pablo's Mexican Restaurants and Hops Grillhouse and Brewery restaurants, with its primary bankruptcy lender as the major buyer.
In papers filed Monday in the U.S. Bankruptcy Court in Wilmington, Del., Avado said 67 of the restaurants and its Madison, Ga., headquarters were sold to Rita Acquisition Corp., an arm of DDJ Capital Management LLC.
DDJ leads a group of lenders that provided a $67 million bankruptcy loan that allowed the company to operate its businesses through the sales. A Waltham, Mass.-based hedge fund that helped Avado emerge from bankruptcy in 2005, DDJ and other senior lenders are owed $39 million in pre-bankruptcy claims. DDJ already owns all of Avado's preferred stock, valued at $23.7 million.
According to court papers, a real estate company in West Palm Beach, Fla., bought a Hops restaurant and a Fairfax, Va., real estate company and fast-food chain Chick-fil-A Inc. each bought a Don Pablo's. RREMC LLC, a company that owns several Denny's and Bennigan's restaurant franchises, purchased nine Hops restaurants.
No purchase price was specified in the documents. A lawyer for Avado could not be reached by Tuesday afternoon.
The restaurants were all sold as going concerns, which means they have the resources to stay afloat.
Avado, which will seek the bankruptcy court's approval of the sales at a Dec. 10 hearing, had faced objections to the sales from several landlords and the federal government official overseeing the case.
Avado filed for Chapter 11 protection on Sept. 5 after a year of heavy losses and increased competition from such chains as Baja Fresh, Chipotle Mexican Grill Inc., Applebee's International Inc. and TGI Fridays.
At the time of its bankruptcy filing, Avado Brands owned and operated 91 Don Pablo's restaurants and 22 Hops restaurants in 22 states.
The company, which once employed 6,970 people, lost $28.4 million on revenue of $227.8 million for the fiscal year ended July 31.
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