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April 28, 2010

Court OK's Fuddrucker's bankruptcy plan

Fuddruckers owner Magic Brands LLC garnered court approval for its bankruptcy plan on Friday, allowing the company to move forward with selling its restaurants.

The Austin-based company currently operates 62 Fuddruckers in 11 states, with an additional 135 eateries owned by franchisees. There are nine North Texas Fuddruckers locations.

Magic announced plans last week to sell the burger brand, and its other company, Koo Koo Roo, to Freebird's World Burrito operator Tavistock Group for about $40 million. As part of the deal, Magic agreed to voluntary file petition for reorganization, which it did April 21.

The District of Delaware in Wilmington approved the plan, which among other actions, pays pre-petition employee wages, salaries and benefits during restructuring and honors customer programs, such as gift cards.

Magic was approved for interim financing from Wells Fargo Capital Finance Inc., which will pay for continued operations, employee wages and purchase goods and services.

“Approval of our first-day motions sets the Company on a very strong footing. This relief ensures that normal operations will continue at all Fuddruckers restaurants,” Fuddruckers CEO Peter Large said.

Last week, Magic Brands also said it will use the Chapter 11 bankruptcy “to terminate certain Fuddruckers leases and will close 24 corporate-owned Fuddruckers restaurants by April 30," including two stores in Austin that shut their doors on April 21.

Beyond Fuddruckers, Magic operates 13 Koo Koo Roo restaurants in California.

dallas.bizjournals.com


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