Garden Fresh files bankruptcy to sell assets, close 20 to 30 stores

By Caroline Salls

Pittsburgh, Oct. 3 – Garden Fresh Restaurant Corp. filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware to implement an agreement reached with its lenders to significantly reduce debt obligations and improve its financial structure.

According to a company news release, Piper Jaffray was hired to assist with the expected sale of Garden Fresh’s business to second-lien lenders, subject to higher and better bids.

The company said it also plans to close between 20 and 30 underperforming restaurants to strengthen its financial position, pending approval from the court.

Garden Fresh requested court approval to enter into an agreement under which Tiger Commercial & Industrial will serve as liquidation agent for the sale of restaurant equipment packages and other furniture, fixtures, and equipment.

The sale is scheduled to begin on Oct. 24.

Under the agreement, Tiger will receive a 10% commission on sale proceeds and an 18% buyer’s premium on all sales. In addition, Garden Fresh will pay the agent $150,000 as a prepayment for costs.

In conjunction with the bankruptcy filing, Garden Fresh said it has received commitments for $4.5 million in debtor-in-possession financing from second-lien lenders to fund post-bankruptcy operating expenses, including its obligations to employees and suppliers.

Cortland Capital Market Services LLC is the administrative and collateral agent.

Interest on the one-year DIP facility will accrue at a rate of 15½%.

The company is seeking interim access to $1 million of the DIP financing.

Garden Fresh said it does not expect its bankruptcy filing to have meaningful impact on its day-to-day operations.

“By improving our capital structure through this restructuring, we’ll be able to accelerate the changes underway to refresh our restaurants and build a strong future,” chief executive officer John Morberg said in the release.

Garden Fresh said it expects to emerge from the Chapter 11 process by Dec. 5.

According to court documents, Garden Fresh Restaurant has $100 million to $500 million in both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Young, Conaway, Stargatt & Taylor is serving as legal counsel.

Based in San Diego, Calif., Garden Fresh operates 128 restaurants in 15 states under two brand names: Souplantation and Sweet Tomatoes. The Chapter 11 case number is 16-12174.

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