Outback Steakhouse franchisee Out West Restaurant Group filed for bankruptcy Monday, and parent company Bloomin’ Brands agreed to purchase substantially all of the operator’s assets through a court-supervised sale.
Out West operates 61 Outback restaurants in the western U.S. The independently owned franchisee, formally known as Cerca Trova Restaurant Group Holdings, filed in the U.S. Bankruptcy Court for the District of Delaware.
Bloomin’ signed an asset purchase agreement Sunday with a starting purchase price of $26.3 million, subject to adjustments and the assumption of certain liabilities. The restaurant company also agreed to provide up to $5.5 million in interest-free financing to support Out West during the bankruptcy proceedings.
The proposed financing would help Out West cover operating expenses and professional and administrative costs associated with the Chapter 11 case. Access would be allowed only when operating cash falls short of the minimum cash needed.
During the bankruptcy process, Out West plans to continue paying newly incurred franchise fees and royalties owed to Bloomin’, along with rent under leases guaranteed by the company.
Out West has had payment issues leading up to bankruptcy. In December 2023, Bloomin’, the franchisee, and its lenders reached an agreement to delay payments and hold off on enforcing certain rights tied to earlier defaults.
Under that agreement, a bankruptcy filing would trigger repayment of amounts owed to Bloomin’ and substantial sums owed to lenders, with lenders getting paid first. However, instead, the bankruptcy filing put those provisions on hold, leaving the parties’ rights to be resolved in court.
The filing does not immediately affect restaurant operations, according to Bloomin’. Out West plans to continue operating during the case and has requested court permission to pay certain employee, vendor, supplier, and other obligations incurred before its bankruptcy petitions.
The proposed acquisition would give Bloomin’ Brands direct control of the franchisee’s restaurant assets if the transaction closes. The company said securing the restaurants would provide direct operational insight, allow investments through its development initiatives, and help limit disruption to guests and employees.
The agreement positions Bloomin’ to become the stalking horse bidder, pending court approval. That role establishes an initial offer for the assets, but competing buyers can submit higher or otherwise better proposals through the bankruptcy sale process.
An auction could follow if qualified competing bids emerge. Any sale to Bloomin’ requires court approval and satisfaction of other conditions in the purchase agreement.
