Another restaurant chain has succumbed to bankruptcy, as the owners of Bakers Square and Village Inn, American Blue Ribbon Holdings, LLC, filed for Chapter 11 on Monday. The company plans to reorganize its operations, which it said will not be interrupted by the bankruptcy filing.

American Blue Ribbon has secured debtor-in-possession financing of $20 million from Cannae Holdings (CNNE), which is the majority equity owner of the company.

By restructuring, American Blue Ribbon hopes the bankruptcy filing will help to evolve both Bakers Square and Village Inn restaurants into a “healthy core” of businesses, which the company plans to facilitate through a series of strategic and structural initiatives to improve the success of the locations in the future.

American Blue Ribbon has seen declining sales since 2017, reporting negative earnings since that time, which the company said were a result of higher wage rates and its struggling restaurant operations.

To address the financial issues, the company has attempted to separate from its equity owner and had new leadership appointed to oversee its brands back in Q3 2018. While efforts were made to turnaround the restaurants, they ultimately relied on funding from ABRH, LLC and non-debtor affiliates to keep operations running.

In 2019, the company American Blue Ribbon closed its support facility in Denver and sold three restaurant properties to fund its operating losses. The company also accelerated collections of its Legendary Baking brand’s receivables to increase its cash flow.

Despite these efforts, expectations for the restaurant brands were continued losses for 2020. ABRH and the non-debtor affiliates have also declined to continue funding the company, which led to the Chapter 11 filing.

American Blue Ribbon said in a statement that it has “worked diligently and strategically to improve the efficiency of the businesses, including substantial reductions in G&A expenses, while maintaining effective operational protocols with focus on improving the customer experience.”

With the bankruptcy filing, American Blue Ribbon has closed 33 “underperforming stores.” The company did not indicate which locations have closed. The company owns 75 Village Inn restaurants and 84 franchised locations as well as 22 Bakers Square restaurants and two manufacturing plants under the Legendary Baking brand.

American Blue Ribbon said the Chapter 11 filing does not affect O’Charley’s or 99 Restaurants, LLC.

Shares of Cannae Holdings stock were down 0.59% as of 9:58 a.m. EST on Tuesday.

Bakers Square Bankruptcy
The owner of Bakers Square and Village Inn restaurants has filed for Chapter 11 bankruptcy. Close-up of plate with pumpkin pie and whipped cream, classic food items during a traditional American Thanksgiving meal, Danville, California, November 28, 2019. Getty Images/Smith Collection/Gado
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