(Bloomberg) — The operator of the Joe’s Crab Shack and Brick House Tavern restaurant chains is preparing to file for bankruptcy, according to people familiar with the matter.
Ignite Restaurant Group Inc. could file as soon as next week, said the people, who asked not to be identified because the process isn’t public. In early April, the company announced it was pursuing options including a possible sale with financial adviser Piper Jaffray Cos. Both strategic and private equity buyers are considering purchasing the company out of bankruptcy, according to one of the people.
A spokesman for Ignite at ICR didn’t immediately return calls and emails seeking comment on a potential filing. A call to the Ignite investor relations line wasn’t immediately returned.
The dining sector has been facing drops in customer traffic, and Ignite reported declining sales in the most recent quarter, with comparable-restaurant revenue falling by 6.8 percent. The company’s debt totals about $121 million, including $112 million on a term loan set to mature in 2019, according to data compiled by Bloomberg. Chief Executive Officer Robert S. Merritt resigned last month.
Ignite fell 63 percent to 2.4 cents at 2:54 p.m. in New York Thursday. The shares have dropped more than 95 percent this year.
Joe’s Crab Shack was founded in 1991 as a national chain of seafood restaurants. As of January, Houston-based Ignite operated 112 Crab Shacks and 25 Brick House Taverns. It sold its 150-location Romano’s Macaroni Grill chain to Redrock Partners LLC in 2015.
–With assistance from Leslie Patton
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