Restaurant chain TGI Friday’s is seeking financing as it prepares to file for bankruptcy protection in the coming weeks, according to sources familiar with its plans. The company has faced difficulties in turning around the results of a business pressured by customers’ tighter budgets and the preference for faster food.
According to these sources, who requested anonymity, the company is in negotiations with creditors in search of a loan that will allow it to continue operating its restaurants during the “Chapter 11” process, the American recovery and bankruptcy legislation, and, eventually, reemerge as a more efficient company.
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TGI Friday’s is being advised by lawyers from Ropes & Gray LLP in its preparations for the RJ request, although the plans are not yet final and may change, according to the sources. Neither company representatives nor lawyers responded to requests for comment. The website Debtwire was the first to report the possibility.
Among TGI Friday’s financial obligations are asset-backed securities, which recently caused tension when the company’s management breached terms by failing to send documents to bondholders on time. As a result of this violation, the company had to hand over control of some assets to an external manager.
TGI Friday’s is just one of several casual dining restaurant chains that have faced increasing competition from fast-casual chains like Chipotle that have captured some of their market share in recent years. The impact of this trend has been intensified by prolonged shutdowns and a drop in customer flow due to the Covid-19 pandemic.
In May of this year, Red Lobster Management also filed for bankruptcy after years of losses, worsened by a promotion called “Endless Shrimp”, which generated financial losses.
The Hooters chain, known for its chicken wings and its waitresses’ signature outfits, is also in talks with creditors and consultants as a drop in revenue has forced some locations to close, according to Bloomberg.
TGI Friday’s was founded on the Upper East Side of Manhattan in the 1960s. The chain expanded throughout the United States, with decor made up of a wide variety of antiques and souvenirs, often local — a style that has since been abandoned by the brand. .
