Buffets opposes sale procedures, looks to select stalking horse bidder

By Caroline Salls

Pittsburgh, Nov. 15 – Buffets, LLC’s official committee of unsecured creditors objected to the bid procedures for the proposed sale of the company’s assets, according to a Monday filing with the U.S. Bankruptcy Court for the Western District of Texas.

“The debtors continue to pursue a Chapter 11 plan that is inconsistent with the sale process,” the committee said.

In addition, the committee said Buffets wants to exclude consideration of any competing plan and maintain the exclusive right to propose and pursue their plan, which calls for controlling insiders to retain their pre-bankruptcy equity interests for no new value.

“Such inconsistency threatens to undermine the sale process and chill bidding,” the objection said.

“The debtors reveal in the first few pages of the bid procedures motion that they have decided to go through the exercise of conducting a sale process merely to determine a value for the debtors’ businesses in support of their proposed plan.”

The committee said that plan assumes little or no value for the company’s assets, and the company is using the insiders’ recently revised and now pessimistic projections to support that assumption.

“Given the foregoing, the committee submits that the debtors’ sale process is proposed for an improper purpose and is not designed to maximize the return for debtors’ bankruptcy estates and their arms-length creditors,” the objection said.

The creditor group said Buffets is “entirely dominated and controlled by the same individual insiders” who would benefit from the plan they have caused the company to propose, to the exclusion of other parties in interest.

In addition, the committee said Buffets seeks to proceed with a disorganized sale process, on inappropriately expedited time frames during the holiday season, without adequate disclosure or analysis of key facts.

As a result, the committee said the sale procedures should be amended to allow the committee to select a stalking horse bidder by Dec. 20, to give the committee the authority to offer a 3% break-up fee and reimbursement of up to $500,000 in expenses as stalking horse bid protections and to set the minimum overbid amount at $100,000, to set the deadline for competing bids as Dec. 30, to schedule an auction for Jan. 6 and to allow the committee to select the highest and best bid.

Based in Hollywood Park, Texas, Buffets operates a chain of buffet-style restaurants. The company re-entered Chapter 11 bankruptcy on March 7, 2016 under the case number 16-50557.

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