Rubio's Restaurants, which said it was closing 48 California restaurants earlier this week, announced on 5 June it is filing for Chapter 11 bankruptcy to facilitate a sale.
Rubio’s will be entering into a stalking horse purchase agreement to sell its business to an entity formed and controlled by its existing lender, the San Diego, California, U.S.A.-based company said in a press release.
Rubio's will also be filing a motion for the implementation of bidding procedures to allow other companies the opportunity to submit bids through a court-supervised process to purchase the assets being sold. It has retained Hilco Corporate Finance to conduct a sale process under the bid procedures so it can seek higher or better offers from prospective bidders interested in purchasing the business.
Rubio’s expects the transaction to be complete within 75 days.
After the closure of 48 restaurants, Rubio’s said its remaining 86 locations in California, Arizona, and Nevada will continue normal operations during the bankruptcy proceedings.
“Like the restaurant industry overall, Rubio's has been negatively affected over the past few years by diminishing in-store traffic attributable to work-from-home practices remaining in place and by rising food and utility costs that, combined with significant increases to the minimum wage in California, put pressure on a number of its locations,” the company said.
Despite the company's “best efforts to right-size the company, the continued challenging economic conditions have negatively impacted its ability to meet the demands of its debt burden,” Rubio’s Chief Restructuring Officer Nicholas Rubin said.
The company has a commitment from its existing lender to provide debtor-in-possession financing and has “more than adequate liquidity” to meet all its operating needs during the sale process, according to the company.
Rubio’s Co-Founder Ralph Rubio will continue with the company and “will provide his usual inspiration and energy going forward,” he said.
Rubio's previously filed for Chapter 11 bankruptcy in 2020, resulting in it closing all of its Colorado and Florida restaurants.
"Making the decision to close a store is never an easy one," the company said in a statement emailed to SeafoodSource. "While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio's for success for years to come. The closings were brought about by the rising cost of doing business in California."
