Late last night, Bennigan’s Restaurant managers across the country were told by management not to open for business today. . . or ever again. The restaurant chain has filed for Chapter 7 bankruptcy protection, which means it will be closed and liquidated with all its assets sold at auction.
According to the WSJ, Bennigan’s had 310 restaurants in 32 states, heavily concentrated in Texas, Illinois, and Michigan. Metromedia Restaurant Group owns the franchise and will also be closing several of its other properties include Steak & Ale Restaurants, 29 Degrees, and Southlake Tavern.
This news comes after Metromedia apparently violated several terms of a lending agreement with GE Capital Solutions. The group was attempting to avoid Chapter 7 for months, ultimately to no avail.
Bennigan’s officials have said that although Bennigan’s is a nationwide chain, only restaurants owned by the corporate management will close. Independent franchisers operating under the Bennigan’s name will not be included in the debt-ridden bankruptcy filing.
Several local news stations are reporting that restaurant managers were given no warning except to close for business today.
According to a CBS 2 Chicago News report, it sounds like those Bennigan’s employees are screwed out of their last paycheck:
CBS 2 Legal Analyst Irv Miller explains that Chapter 7 bankruptcy means the company is being liquidated, as opposed to Chapter 11 bankruptcy, in which a company tries to reorganize and remain in business.
Miller said a Chapter 7 filing usually means a company has “major league debt,” and it is unlikely that employees would get their last paycheck. He said someone could conceivably buy the assets and reopen the full Bennigan’s chain, but that would only be after a long, drawn out court process.
This definitely sucks for all those employees out of a job during such a tough market. But one could see how the increasing recession has caused mid-level casual dining restaurants to lose customers. If you are trying to live on a budget, trips to Applebee’s and Bennigan’s will probably be the first things to go. Additionally, the increase in minimum wage last week may have affected employee salaries and sped up the bankruptcy decision.
Also looks like the Bennigan’s official website is having some problems right now. Super slow load times and timeout failures. Maybe everyone is scrambling to find out if their reservations for dinner tonight are still good. Just kidding, no one makes reservation for friggin’ Bennigan’s.
CBS 2 Chicago: Bennigan’s Restaurants Shut Down Nationwide, July 29, 2008
WSJ: Bennigan’s, Steak & Ale File for Bankrupcy Protection, July 29, 2008
UPDATE: Looks like other casual dining restaurants are trying to gobble up all the former Bennigan’s employees.
UPDATE: I will definitely miss this great Bennigan’s commercial brimming with ironic cliches.