American Blue Ribbon Holdings announced Monday that it’s emerging from bankruptcy with two separate entities and 62 fewer company-owned restaurants.
The company—the parent of Village Inn and Bakers Square—ended 2019 with 130 company-owned units. As it entered bankruptcy in January, American Blue Ribbon shuttered 33 underperforming stores, leaving it with 97. During bankruptcy, the company decreased the company footprint by 62—34 stores became franchises and 28 permanently closed.
Since the end of 2019, 61 company stores have permanently closed.
Under the new corporate tree, one entity will oversee 21 company-owned and 118 franchised Village Inn restaurants and 14 company-owned Bakers Square restaurants. The other corporation will own Legendary Baking, which makes more than 20 million pies each year. The effective date of the new entities will be announced at a later date.
The restructuring plan does not affect O’Charley’s or Ninety Nine Restaurants.
“The confirmation of the Plan by the Court results in a healthy capital structure and foundation for each of the businesses to optimize their value,” said CEO Craig Barber in a statement. “The emergence of the businesses from the reorganization process is especially rewarding given the challenges since March with COVID related restrictions. We look forward to fulfilling a singular focus on delivering value for the benefit of all stakeholders, including our customers, employees, franchisees, suppliers, creditors and owner. We are truly excited for the days and years ahead.”
At the time of bankruptcy, American Blue Ribbon said financial numbers have trended in the wrong direction since 2017, with declining sales and margins. The brand cited higher wage rates, unfavorable trade locations, high rent, increased competition in the family-dining segment, and emphasis of off-premises as reasons for the downward movement. American Blue Ribbon sustained operating losses of $11 million in 2018 and $7 million in 2019.
The company said Legendary Baking’s performance declined from 2016 to 2018 because of over-expansion, the addition of a new leased production facility, and a decline in operating efficiencies at existing facilities. As a part of the reorganization, Legendary recently consolidated all manufacturing operations to its 60,000 square foot facility in Chaska, Minnesota.
Additionally, ABRH and other non-debtor affiliate companies said they were no longer funding American Blue Ribbon’s operations. In the filing, American Blue Ribbon noted that in the absence of continued funding by ABRH, it projected a “liquidity crisis on or about the petition date.” The company said it didn’t have the “contracts, infrastructure or human resources” to independently maintain operations without ABRH.
American Blue Ribbon received $20 million in debtor-in-possession financing from Cannae Holdings, its majority equity owner, to support reorganization. During proceedings, that was increased to $27.5 million to address issues from the COVID pandemic.
