Tumbleweed Restaurants, Inc. Seeks to Restructure Debt through Voluntary Chapter 11 Petition; Normal Operations Continue.
Louisville, KY - Tumbleweed Restaurants Inc., which operates and franchises Tumbleweed Southwest Grill locations in Kentucky, Ohio and Indiana, today announced that in order to continue its normal operations and enhance the value of their business, they have filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Louisville, KY.
Tumbleweed intends to use the Chapter 11 process to restructure debt obligations with an Arizona-based lender.
The Company determined that Chapter 11 reorganization is in the best long-term interest of the Company, its employees, customers, creditors, business partners and other stakeholders.
Chief Executive Officer Matt Higgins said, "After 15 unsuccessful months of aggressively seeking to restructure terms with our largest debtor, the Company concluded that today's court filing was both prudent and necessary. Although we have taken steps to significantly improve sales and profitability at the unit level, this unreasonable loan package-arranged in different economic times to fund unit growth and chain expansion--threatened Tumbleweed's very survival and blocked management's ability to plan strategically."
"Filing Chapter 11 provides Tumbleweed the protection it needs to improve profitability, while initiating a formal process to restructure our balance sheet. Throughout the duration of this reorganization, we will continue to provide our loyal guests the quality and service they've come to love, while meeting our post-petition obligations to suppliers and other business partners."
Higgins continued, "We will use this reorganization process to make the Company stronger and more financially secure as we continue to contend with the current challenging operating environment. Our sales performance is trending well ahead of our competitive set in the Casual Dining Industry. In fact, First Quarter 2009 same store sales were up 3.7% in the Louisville market versus last year, same period.
Normal business operations will continue at all Tumbleweed locations today and throughout the reorganization process. No units are targeted for closing and the Company plans no layoffs. It's franchise partners were unaffected by this filing.
"As we work to emerge from Chapter 11, Tumbleweed will continue our heritage of combining great food at a great price with a fun dining experience for our guests," said Higgins. "Our employees are the heart of that effort. They're the ones who generate the energy and determination we need to successfully meet today's challenges. Our commitment to 'Wow-ing' each and every Guest remains intact."
For more information about Tumbleweed, Inc., contact Rick Schardein, (502) 561-2439 or firstname.lastname@example.org.Definition
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to any business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.
In Chapter 11, the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.
A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue.