Logan’s Roadhouse Memorandum to Employees Unveils Bankruptcy Exit Plan

by San Antonio Attorney

Logan’s Roadhouse Inc. is preparing to leave bankruptcy protection in November after negotiating its leases, cutting $300 million in liabilities and shutting down locations that were not doing well.

The details reportedly came from a memorandum to workers from the company’s restructuring officer, Nishant Machado.

The memorandum was released after closing 34 of its locations as part of the bankruptcy plan.  Machado said that the move was necessary so that Logan’s can keep going.

He said the managers of underperforming units that were closed were reassigned to better performing sites.

Logan’s Roadhouse, which used to have 256 locations, declared bankruptcy in August, stating $416 million in liabilities.  It generated $606.4 million in revenues in 2015, but income before taxes, interest, amortization and depreciation were minus $112 million.

The problems of the company were attributed to declining sales in the restaurant business, especially in the casual-dining sector.  Foot traffic dropped 9% in the first half of 2016.

The bankruptcy filing of Logan’s Roadhouse is one of the many restaurant bankruptcies filed since November 2015.

Logan’s Roadhouse wants to reorganize its debt, instead of selling itself.  The company says it has a plan that is going to help it exit from bankruptcy protection soon with a much improved balance sheet.

The memo also stated that Logan’s Roadhouse’s plans include an incentive program and bonuses for employees that are going to be rolled out next year.  A month ago, the company sought permission from the court to give bonuses to its executives and workers as a measure to retain the employees throughout the bankruptcy process.

The bonus program is timely as the restaurant sector’s labor market has become more and more competitive.

Logan’s Roadhouse expects to shed $300 million of its liabilities through bankruptcy.

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