Chapter 11 Bankruptcy
On February 20, 2007, Specialty Restaurant Group filled for Chapter 11 bankruptcy reorganization in U.S. Bankruptcy Court for the northern district of Texas. The company's bankruptcy filings indicate that SRG owes millions of dollars to a variety of creditors across the United States, including former parent-company, Ruby Tuesday.
"SRG's debts include a $11.2 million bank loan, a $2.5 million debt to the Internal Revenue Service and $700,725 to Ruby Tuesday. In its filing, SRG lists assets of between $10 million and $50 million and a similar range of debts."
In a February 2007 letter to the company's creditors, SRG CEO James CarMichael stated: "This decision was not an easy one to make but based on the advice of our legal counsel and financial advisers, it is the right decision for the company and its employees."
In early 2007, Ruby Tuesday indicated in an SEC filing that it had learned that SRG had defaulted or was late at least once in rent payments for 17 restaurants that had been sub-leased by SRG from Ruby Tuesday. As a result, Ruby Tuesday anticipated taking a charge related to these 17 restaurants, although the company expects the actual charge to be "substantially less" than the $6.1 million dollars remaining in scheduled payments for the various leases.
Read more about this topic: Specialty Restaurant Group
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