Updated at 3:41 p.m. on March 7 with the addition of the official statement from Buffets, LLC. (see end of article)
CULLMAN – Ryan's Restaurant on Cherokee Avenue in Cullman closed without notice or warning this weekend, leaving employees and customers alike looking for answers. It has just been announced that Buffets, LLC and affiliated dining chains owned by Ovation Brands, Inc., Ryan's parent company, filed for bankruptcy today.
As recently as two hours ago, the company was not answering questions, and when reached for comment, Ovation Brands media contact Kim Miller told CullmanSense, "The company has no comment at this time."
According to WBRC FOX6 News in Birmingham, "Hometown Buffet, Inc. today filed for bankruptcy protection. We’ve received several reports of Ryan’s locations in Alabama closing over the weekend without notice. You may have affected restaurants in your markets by a different name, including: Buffets, Fire Mountain, Tahoe Joe's. In Alabama, the company owes $125,518.07 in corporate income taxes. There are 92 stores that were closed immediately; 74 others were closed a few weeks ago."
From Reuters:
HomeTown Buffet Inc and affiliated dining chains owned by Ovation Brands Inc filed on Monday for Chapter 11 bankruptcy, according to court documents, potentially affecting more than 300 U.S. locations.
It was the second filing in four years for Ovation, which was previously known as Buffets Inc.
In addition to HomeTown, other Ovation chains seeking bankruptcy protection from creditors included Old Country Buffet, Ryan's, Fire Mountain and Tahoe Joe's, according to court documents.
A spokesman for Ovation declined to comment.
Ovation, based in Greer, South Carolina, operates 328 restaurants in 35 states, employing 17,000, according to its website.
The chains listed assets worth up to $50 million and liabilities of up to $100 million, according to documents filed in the U.S. Bankruptcy Court for the Western District of Texas.
Buffets Inc, the predecessor to Ovation, and the Ryan Restaurant Group merged in 2006 to create the largest U.S. buffet chain.
In early 2008, however, the company filed for Chapter 11 bankruptcy to shed some of its 626 locations and cut its debt by $700 million.
The company returned to bankruptcy in 2012, this time to slim its reach from 494 restaurants.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Chizu Nomiyama and Nick Zieminski)
Ryan's locations in Cullman, Gardendale, Fort Payne, Jasper, Scottsboro and Decatur have been closed so far.
This is a developing story. If you are an employee of the Cullman Ryan's, we'd love to speak with you. Please email us at news@cullmansense.com.
Official statement from Buffets, LLC:
SAN ANTONIO, Texas – Buffets, LLC, comprised of Ryan’s®, Fire Mountain®, Country Buffet®, Old Country Buffet®, Tahoe Joe’s Famous Steakhouse® and Hometown Buffet®, is set to file Chapter 11 bankruptcy so that it can restructure its debts and liabilities, strengthen its operations by closing certain weaker restaurants and recapitalize its business. Customers will continue to enjoy the same quality food and service as prior to the proceedings, and vendors will be largely unaffected. As a measure of management’s confidence, a multi-million-dollar loan is being extended to Buffets, LLC, to assist in the restructuring.
“Buffets, LLC, was acquired by merger in August of 2015. The Chapter 11 filing is prompted by the discovery of liabilities, or alleged liabilities, that we believe were not disclosed in our negotiations,” says Peter Donbavand, Vice President for Business Development. “We intend to investigate the propriety of the disclosures, and intend to consult with our counsel regarding any remedies we may have.”
Among other matters which were made known only after the acquisition is an $11.37 million default judgment against Buffets, LLC, (formerly known as Buffets, Inc.) which was awarded to plaintiffs in October 2015 arising out of a 2014 court case for an incident dating back to 2010. Such lawsuit was not disclosed by the sellers, and Buffets, LLC, is attempting to overturn such judgment on the basis of the wrong defendant entity having been sued and other grounds. Buffets, Inc., the named defendant, was not the entity actually operating the restaurant where the alleged incident occurred.
Donbavand also commented that in addition to a precipitous decline in sales at the restaurants that, in his experience, was unusual, several large, long-term contracts were only recently determined to be, or alleged to be, in arrears and have had to be addressed in order to continue restaurant operations. “All of these issues are being reviewed by financial and legal professionals,” says Donbavand. “However, we are completely committed to the continued operation of these brands, and this is a necessary step for us to take to make this happen.”
