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Long Gone Silver's?
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June 2, 1998: 3:05 p.m. ET
Kentucky-based seafood chain seeks Chapter 11 protection to reorganize
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NEW YORK (CNNfn) - Long John Silver's Inc., the nationwide restaurant chain that popularized the idea of seafood as fast food, said Tuesday it looked forward to a "fresh start" after filing for Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del.
"We've made the turn and we're confident that we'll have the capital now available to do some of the image-enhancing" needed for the turnaround, said Bruce Hintor, a company spokesman.
A court hearing on the Chapter 11 petition was scheduled for Tuesday afternoon.
Chapter 11 status allows a firm to develop a financial reorganization plan while the court protects it from lawsuits by creditors. The plan must pass muster with the creditors.
Privately held Long John Silver's operates more than 1,400 company-owned and franchised restaurants in 36 states, Singapore and Thailand. The chain had had plans to add about 50 franchised locations over the next several years, but it chose to defer any new openings after deciding to seek Chapter 11 protection.
Instead, Hintor, said, the company has closed 25 restaurants in the last year as part of a broader effort to reduce food and labor costs and ease its heavy debt burden.
In court documents filed late Monday, the company listed debts of $457.3 million and assets of $329.1 million, including $241.3 million in fixed, liquidated secured debt with 15 creditors. An additional $210.2 million in fixed, liquidated unsecured debt is being sought by more than 1,000 claimants.
The unsecured creditors include a host of brokerage houses and banks, among them Goldman Sachs & Co. with a $6.3 million claim. The company also owes $3.2 million to Tyson Foods.
The company's current impasse, Hintor said, arose from residual debts stemming from Long John Silver's highly leveraged, $600 million buyout of stock options in 1989. Since then, the restaurant chain has undergone four restructurings which failed to eliminate any debt.
The company has had other problems as well recently.
Late last year, a commercial the company ran to promote its new "grab and go" sandwich campaign offended the Fraternal Order of Police for its depiction of a police officer swiping a fish and chicken sandwich from a motorist. The slogan prompted a lawsuit from a West Virginia frozen-chicken producer that alleged trademark infringement.
Several of the company's affiliates, including Abbot Advertising Agency Inc., Florenz Inc. and Long John Silver's Properties Inc. also filed chapter 11 petitions.
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