TGI Fridays, a restaurant chain, has sought Chapter 11 bankruptcy protection, citing challenges with its capital structure and the effects of the COVID-19 pandemic.
The Texas-based bar-and-grill chain has faced declining sales in the U.S. for several years and submitted its bankruptcy filing on Saturday in the U.S. Bankruptcy Court located in Dallas, reported The Wall Street Journal.
As mentioned in court documents, TGI Fridays has arranged a loan from the Bank of San Antonio to aid its operations during this time.
Recent reports suggested that the chain was nearing bankruptcy.
Currently, TGI Fridays operates 39 company-owned restaurants across the U.S. Franchised locations, which are managed independently and are not part of the bankruptcy filing.
This year’s bankruptcy filings among restaurant chains are projected to reach their highest numbers in decades, excluding 2020, when many businesses had to close due to the pandemic, according to analysis from BankruptcyData.com reported by WSJ.
According to data from market research firm Technomic, the chain’s U.S. sales fell to $728 million last year, reflecting a 15% drop from the previous year, per WSJ.
TGI Fridays has also been shutting down restaurants; it operated 292 locations last year, an 11% decrease compared to 2021. In June, the company’s independent auditor cautioned that TGI Fridays was running low on funds to fulfill its debt obligations.
TGI Fridays has appointed Kyle Richter, from the consulting firm Berkeley Research Group, as its chief restructuring officer to help navigate the bankruptcy process, reported WSJ. The company is receiving legal counsel for its bankruptcy proceedings from the law firms Ropes & Gray and Foley & Lardner.
