The parent company of a restaurant holding group based in Ohio has filed for Chapter 11 bankruptcy protection recently in an effort to keep its Beachwood, OH location operational. The company filed its voluntary petition for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Northern District of Ohio in the last week of September 2018.
Red Restaurant Group Bankruptcy
The Red Restaurant Group operates both the “Red, The Steakhouse” and “Moxie, The Restaurant” brands with four steakhouses and one moxie location. According to Ohio Bankruptcy filings, the company has $3.5 million in total liabilities, but a mere $442,000 in assets. When questioned about the Ohio bankruptcy, owners cited large, under-capitalized expansions of the 811 Kitchen concept last year as a main cause for the bankruptcy.
Chapter 11 Proceedings and Reorganization
Red the Steakhouse located in downtown Indianapolis has already closed down in an effort to improve the company’s balance sheet. Even though, the CEO of Red Restaurant Group, Brad Friedlander expects the Chapter 11 bankruptcy to be a quick process for the organization in which the remaining restaurants will stay open for business. Additionally, they hope that Chapter 11 funding will allow the organization to remodel Moxie in Beachwood in Ohio. The bankruptcy will also allow the company to continue to pay the 150 employee workforce employed in Northeast Ohio.
The US Bankruptcy Code allows troubled businesses to file for Chapter 7 bankruptcy for a quick orderly shutdown, or to file Chapter 11 bankruptcy in order to reorganize debts and renegotiate terms with its creditors and vendors. With restaurant bankruptcies in Ohio that involve numerous stores, it’s sometimes necessary to close less profitable stores in order to focus on the locations that earn the most revenue. As with every business, Ohioans grow to love, our hope is that Moxie and Red, the Steakhouse will be able to bounce back from their high debt issues and make a successful financial comeback.