Restaurant chain Ruby’s Diner has entered a plan support agreement with its franchisee owner Steven L. Craig to reduce its debt and strengthen its balance sheet.
The dining chain has also filed a Chapter 11 voluntary petition for the Central District of California to restructure its financial obligations.
Through these agreements the company will be able to formulate a new strategic business plan for increased store sales and franchise growth.
The Chapter 11, which covers certain wholly-owned restaurants located in Huntington Beach, Laguna Hills, Oceanside and Palm Springs, will support the company to implement the agreement.
Franchises and the other 28 restaurants are not included in the proceedings.
Ruby’s chief executive officer Doug Cavanaugh said: “Ruby’s is excited about the next chapter in its evolution. The agreement and proposed equity infusion are strong endorsements of the Ruby’s brand.
“Our restaurants are open and customers can continue to rely on great food and excellent customer service. We will continue to sell and honour all customer gift cards and our Ruby’s Rewards programme remains in place.”
If the agreement is implemented, Ruby’s Diner will emerge from bankruptcy and Craig will own 60% of the reorganised entity.
The company noted that this process will have little or no impact on employees, restaurants or franchisees and intends to close it in 120-180 days.