The Franchise Owner's most trusted news source


Log In / Register | Jun 25, 2018

Buffets LLC Files for Bankruptcy Again, Revenues and Lawsuit to Blame

HOLLYWOOD PARK, Texas – For the third time since 2008, Old Country Buffet parent company, Buffets LLC, has filed for Chapter 11 bankruptcy protection from creditors, blaming not only disappointing revenue but also litigation that proved costly to the company.

A district judge in Wyoming last year awarded a couple a $11.37 million judgment against the company, now owned by Ovation Brands. Five years earlier, Chris Gage, who was medically compromised, ate at a Cheyenne, Wyoming Old Country Buffet with his wife. When they left, he became seriously ill and they discovered he was infected with Salmonella bacteria, which left him forever damaged.

A Food Safety News report stated that the Gages file a lawsuit against the restaurant and company in 2010. But the legal case was unusual because all the time the couple sought justice with their attorney in the courtroom, Old Country Buffet defendants were no-shows. Because records showed the company had been served with the lawsuit, the judge was free to make a default judgment, which resulted in the $11.37 million.

Now that Ovation Brands has filed for bankruptcy protection and the restaurant has been closed down, the Gages have not been paid. The Food Safety report said that the couple, who were from out of town more than likely did not know others in the Cheyenne area were also sickened after eating at the same restaurant. While the others recovered, Chris Gage was found to be in total renal failure from the infection, resulting in septic shock.

Little has been reported on the crushing lawsuit, as reported in USA Today this week in light of the Chapter 11 bankruptcy. It stated that prior management had "apparently overlooked" the 2014 lawsuit regarding the Salmonella lawsuit. The company's attorney had failed to file a timely response to the suit.

News reports say that the once popular all-you-can-eat restaurant chain has been struggling since cash-strapped families cut back on eating out or choosing fast food options instead. USA Today stated, "Buffets LLC had filed for bankruptcy protection in 2008 and 2012, each time shedding debt and shuttering restaurants in an attempt to identify a sustainable path." It said the company now has about 150 stores with about 9,000 employees. It added that when Ovation acquired Buffets LLC last August, it quickly encountered significant problems. Sales fell 22 percent below the acquirer's expectations, according to court filings.

For several months, Ovation Brands has been shutting down restaurants across the country. In addition to its Old Country Buffet, Buffets LLC also owns Ryan's, HomeTown Buffet, Fire Mountain, Country Buffet and Tahoe Joe's. It owes $46.2 million in loans secured by all of its assets and guaranteed by its new owners.

--

Related Articles:

 

 

 

 

 

No votes yet

About Janet Sparks

Janet Sparks's picture

Public Profile

Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.