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Sunday, Jun 16, 2024

Rubio’s Files for Chapter 11 Bankruptcy

RESTAURANTS: Iconic San Diego Brand Looking to Sell

CARLSBAD – Rubio’s Restaurants on Wednesday filed for bankruptcy after closing nearly 48 locations in California on June 1, including 13 in San Diego County.

The San Diego-founded restaurant chain that popularized fish tacos around the U.S., announced that it has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, for what company officials say is to facilitate the sale of the business.

Headquartered in Carlsbad, Rubio’s still has 86 locations in California, Arizona and Nevada that will continue normal operations.

The chain that opened in 1983 near Mission Bay has had challenges with declining in-store traffic, which Rubio’s leaders say is attributable to work-from-home practices remaining in place, by rising food and utility costs and significant increases to the minimum wage in California.

Those challenges put pressure on a number of its locations.

In a news release, Nicholas Rubin, chief restructuring officer of Rubio’s Coastal Grill, called Rubio’s “one of the legendary fast casual chains with a strong and loyal customer following in its communities.”

Rubin said that despite the company’s “best efforts to right-size the company… challenging economic conditions have negatively impacted its ability to meet the demands of its debt burden.”

Rubin said the company’s best path forward will be through a court-supervised sale process “that will position the brand for long-term success to grow and flourish.”

Rubin said the company has a commitment from its existing lender to provide debtor-in-possession financing and has more than adequate liquidity to meet all operating needs during the sale process.

The company will be entering into a stalking horse purchase agreement – a binding agreement between a bankrupt company and a potential buyer to purchase some or all of the company’s assets — to sell its business as a going concern to an entity formed and controlled by its existing lender.

Rubio’s will also be filing a motion for the implementation of bidding procedures to allow other companies the opportunity to submit bids through a court-supervised process to purchase the assets being sold.

The company anticipates the sale transaction will be completed within 75 days. Hilco Corporate Finance is conducting a sale process under the bid procedures.

Rubio’s is seeking court approval to continue operations during the sale process so employees will still earn wages and have benefits, and Rubio’s will continue its customer programs. Co-founder Ralph Rubio will continue with the company.


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