HomeTown Buffet, affiliated dining chains file for bankruptcy
By Tom Hals
WILMINGTON, Del. (Reuters) - The owner of HomeTown Buffet and other buffet dining chains filed on Monday for Chapter 11 bankruptcy, blaming a lawsuit that was not disclosed when its current owner bought the businesses in August.
Buffets LLC, an affiliate of Food Management Partners, in August paid an undisclosed amount for the chains Old Country Buffet, Ryan's, Fire Mountain and Tahoe Joe's, in addition to HomeTown, according to Food Management Partners' website.
Those chains, which operate 150 restaurants, were part of the bankruptcy filing on Monday, according to court documents.
The firm that sold the restaurant chains in August did not disclose a pending lawsuit, which resulted in an $11.4 million judgment, according to a statement from Peter Donbavand of San Antonio, Texas-based Food Management Partners.
He also said the chains have experienced sharp drops in sales that he considered unusual. The statement did not say who sold the businesses to Food Management Partners, and a spokeswoman would only say it was "private equity."
The company said sales have fallen 22 percent short of the seller's projections, prompting the closure of 74 stores in recent weeks and another 92 in the next 10 days.
Buffets LLC and the chains do business under the Ovation Brands name.
It was the third filing since 2008 years for the restaurant chains, which previously entered bankruptcy known as Buffets Inc. Continued...