Village Inn parent files for Chaper 11, secures DIP financing
Bankruptcy court filing to help reset Village Inn, Bakers Square chains
American Blue Ribbons Holdings, parent of Village Inn, Legendary Baking and Baker’s Square filed for bankruptcy protection under Chapter 11 in the U.S. Bankruptcy Court of Delaware. The filing doesn’t impact O’Charley’s LLC or 99 Restaurants, which are not part of American Blue Ribbon Holdings.
The company secured debtor-in-possession (DIP) financing from Cannae Holdings, Inc. for $20M, which is part of the reorganization plan. A majority shareholder, Cannae owns Fidelity Newport Holdings, LLC, which owns the parent of American Blue Ribbon Holdings.
For the past three years, American Blue Ribbons Holdings has used funding from its parent and sister brands while it’s sales trends remained negative. In addition, it has used Legendary Baking as a crutch during its difficulties. The DIP financing will help Legendary Baking, which bakes 25 million pies on average each year at two facilities, to continue normal operations, the company asserted.
In 2018, the company looked at strategic alternatives, but did not succeed. In late 2018, its parent ABRH, LLC, and other affiliates began helping fund operations at American Blue Ribbons Holdings. In 2019, the company sold its support facility in Denver, closed three restaurant properties, and worked on improving collections of Legendary Baking’s receivables.
The company blames higher wage rates on some of its financial shortfalls. Its parent said its affiliates and its management were no longer willing to help fund operations. This led to the bankruptcy filing.
Despite installing new management to address operational concerns at its restaurants, American Blue Ribbon Holdings was forced into the Chapter 11 filing. It has closed 33 underperforming restaurants, obtained DIP financing and is exploring strategic alternatives. The case was filed January 27 and assigned to Laurie Selber Silverstein. Robert F. Poppiti, Jr. of Young, Conaway, Stargatt & Taylor, LLP represents American Blue Ribbon Holdings in the bankruptcy filing.
Nashville, Tenn.-based American Blue Ribbon Holdings operates and franchises 159 Village Inn restaurants and 22 Bakers Square eateries. It also operates two Legendary Baking production facilities.
Photo credit: Village Inn Restaurants
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