The company says it hopes to reopen 125 restaurants in the future.
Craftworks Holdings, parent of Logan’s Roadhouse and Old Chicago Pizza & Tap Room, fired a majority of its 18,000 employees that were furloughed a few weeks ago.
Healthcare benefits were terminated as well, effective March 31.
The news came in a letter from new CEO Marc Buehler, who replaced Hazem Ouf. Ouf and CFO Jim Lebs exited the company recently after they allegedly paid millions in sales tax without the company’s knowledge.
“The status of all team members will be revised from furloughed to terminated,” the letter said. “… Please know that we continue to work diligently towards a reopening date and are looking forward to the day when we hope to bring many of you back with a new suite of benefits.”
The letter encouraged employees to explore other healthcare options via the Affordable Care Act’s Health Insurance Marketplace, a spouse’s employer plan, a parent’s employer plan (if under 26), or Medicare.
A court document said fewer than 25 employees are remaining “to help preserve, maintain, and secure their assets during the shut-down period.” CraftWorks plans to pay only their “most critical business-related expenses” including accrued employee wages, accruing employee wages, and benefits for the remaining employees.
The brand’s wants to reopen about 125 units in the future, gutting its footprint by more than half. The company will file lease rejections for locations it plans to close permanently.
Craftworks filed for bankruptcy in early March and planned to sell its 261 company-owned locations after shuttering 37 underperforming locations earlier in the year.
Weeks later, the brand closed its restaurants and furloughed employees due to the COVID-19 outbreak sinking bankruptcy proceedings.
The company had an agreement with senior lender Fortress Credit that provided total consideration of at least $138 million plus the assumption of certain liabilities. But Fortress withdrew a $23 million loan that was helping the company continue operations. CraftWorks’ cash dried up, causing the loan to default.
Craftworks reached an agreement with Fortress to use cash and receive bankruptcy financing loans up to $4 million to stay afloat for the next six weeks.
Steven Reisman, an attorney for CraftWorks, said the company plans to "press pause on the bankruptcy case, or shrink wrap their operations, in a way that allows them to be in a position to reopen restaurants in the future.”
Another lawyer, Bradford Sandler, said “Putting the case into a life-support mode in our judgment is the best way to proceed.”
The news comes after the company fired Ouf and Lebs after it was discovered they paid $7 million in sales tax to state authorities without permission from the company’s board. A court filing said the actions weren’t discussed with counsel or a financial advisor and were “done surreptitiously by those individuals and with knowledge of the Debtors’ obligations and restrictions under the Interim DIP [Debtor In Possession] Order.” The company was only able to reverse $360,000 of the payments.
The brand operated more than 330 domestic restaurants in 39 states and Washington, D.C. Its other brands include Gordon Biersch Brewery Restaurant, Rock Bottom Restaurant, BreweryBig River Grille & Brewing Works, ChopHouse & Brewery, A1A Ale Works, Ragtime Tavern Seafood & Grill, Seven Bridges Grille & Brewery, and Sing Sing, a Big-Bang dueling pianos concept.