Atlanta-based Hooters of America has filed for Chapter 11 bankruptcy but says it has a plan to sell restaurants to longtime franchisees and stay open.

The restaurant chain, known for chicken wings and “Hooters Girls” wait staff clad in eye-catching uniforms, has been rumored to be preparing for bankruptcy for weeks.

Waitresses dressed in orange shorts and t-shirts cheers while welcoming the arriving guests at the Hooters restaurant in Beijing in September 2007. Andy Wong/AP 2007

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Credit: AP

The company and its affiliates filed for Chapter 11 protection Monday in U.S. Bankruptcy Court in the Northern District of Texas and said its goal is to emerge from bankruptcy “in approximately 90-120 days.”

It said it has “near unanimous” support from key stakeholders and is seeking approval of $40 million in financing from existing lenders to fund operations during the bankruptcy process.

Hooters of America said it has an agreement to sell some company-owned locations to a group of current franchisees, including the original Hooters founder, Hooters Inc.

Hooters Inc, and another franchisee, Hoot Owl Restaurants, already own and operate more than 30% of domestic franchised Hooters locations and announced Monday they have an agreement to acquire more than 100 Hooters restaurants from Hooters of America.

Hooters of America said its restaurants “remain open to serve customers and will continue to operate in a business-as-usual manner during its Chapter 11 cases.”

“Our renowned Hooters restaurants are here to stay,” Hooters of America CEO Sal Melilli said in a written statement.

The Original Hooters in Clearwater, Florida. Hooters is reportedly working on a bankruptcy plan that would allow the restaurant chain to restructure and manage debt. Douglas R. Clifford/TNS)

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However, the company could seek to downscale its operations through the Chapter 11 restructuring process, which often allows companies to extinguish debts and get out of leases and other contracts.

In a press release, Hooters of America said it is “evaluating the company’s operational footprint as part of its financial restructuring process to position itself to invest its resources in its strongest assets moving forward.”

Hooters has been based in Atlanta for decades. The first Hooters opened in Clearwater, Florida, in 1983. The following year, a group of Atlanta investors bought expansion and franchise rights. Over the years, it has grown to more than 420 locations in 29 countries.

Hooters of America was acquired by Nord Bay Capital and TriArtisan Capital Advisors in 2019 from other private equity firms.

The company opened Hoots Wings by Hooters counter-service locations several years ago in Atlanta and other cities, but those locations are no longer open, according to Hoots Wings’ website.

Hooters Inc. CEO Neil Kiefer said in a written statement: “For many years now, the Hooters brand has been owned by private equity firms and other groups with no history or experience with the Hooters brand.”

Kiefer added that, with the transactions, “the Hooters brand will once again be in the hands of highly experienced Hooters franchisees” and said the buyer group is “committed to restoring the Hooters brand back to its roots” and simplifying operations through a “pure franchise model.”

The buyer group said a management company it owns will provide franchise support with a national ad fund, central purchasing, franchise development and other functions.

Plans are for the buyer group to own and operate about 70% of Hooters’ domestic locations after the acquisitions and for all Hooters locations to be franchisee-owned at the end of the Chapter 11 process.

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