Hooters of America LLC unveiled a comprehensive restructuring plan in bankruptcy court that would transition the iconic restaurant chain from a hybrid business model to a pure franchise operation, selling 103 company-owned restaurants to new investors while seeking to reduce its $376 million debt load.
The plan, detailed in a disclosure statement filed May 6 with the U.S. Bankruptcy Court for the Northern District of Texas, outlines a three-pronged approach to revitalize the 41-year-old brand known for its chicken wings and distinctive waitstaff uniforms. The restructuring would maintain the Hooters brand while drastically altering its operational structure.
"The transactions contemplated by the Restructuring Support Agreement will enable the Debtors to achieve a three-pronged operational overhaul," the company stated in its court filing. This includes a sale transaction with a group identified as "the Buyer Group" (consisting of Hooters, Inc. and Hoot Owl Restaurants, LLC), a transition to an entirely franchise-based model, and significant debt restructuring.
The plan comes after Hooters and 26 affiliated entities filed for Chapter 11 protection on March 31, 2025, citing inflationary pressures, industry headwinds, and an unsustainable debt structure. The company reported approximately $376 million in funded debt at the time of filing.
Under the proposed restructuring, a newly renamed entity called "RoyaltyCo, LLC" would own the Hooters intellectual property and collect royalty revenues from franchisees. Meanwhile, a separate entity called "Brand Co." owned by the Buyer Group would oversee brand management functions. The remaining company-owned locations not included in the 103-store sale would be wound down.
"The Restructuring Support Agreement provides a viable path forward and a framework to successfully exit chapter 11 in a timely fashion with the support of a substantial majority of the Company's creditor stakeholders," the company stated in its filing.
The plan has significant creditor support, backed by a Restructuring Support Agreement signed by holders of approximately 94% of the company's securitization notes claims. The agreement also provides for up to $35 million in debtor-in-possession financing, plus a roll-up of $5 million of existing obligations, to fund the bankruptcy process.
Hooters detailed in its filing how the casual dining segment has struggled with rising labor and food costs, while consumers have become increasingly cost-conscious amid inflationary pressures. The company had already closed 48 underperforming stores since early 2024 prior to filing bankruptcy.
"As inflationary pressures have made consumers increasingly cost-conscious, preferences for casual out-of-home dining experiences began to shift to more cost-efficient alternatives," the disclosure statement noted.
The company had conducted an extensive marketing process before filing bankruptcy, contacting 95 potentially interested parties, of which 38 signed confidentiality agreements and six expressed interest in a comprehensive transaction. Ultimately, the company received formal proposals from three parties before proceeding with the current plan.
The restructuring also addresses a notable dispute regarding approximately $4.2 million in annual royalty obligations that Hooters has been paying to an entity called Lags Equipment, LLC. The disclosure statement indicates the company is "evaluating all of their rights and treatment and validity of the relevant agreements and purported obligations."
The case is being heard by Judge Scott W. Everett in the U.S. Bankruptcy Court for the Northern District of Texas (Case No. 25-80078). Hooters is represented by Ropes & Gray LLP as lead counsel and Foley & Lardner LLP as co-counsel.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 121 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.