Romano’s Macaroni Grill operator files bankruptcy under creditor deal

By Caroline Salls

Pittsburgh, Oct. 18 – Mac Acquisition LLC, also known as Romano’s Macaroni Grill, filed Chapter 11 bankruptcy on Oct. 18 in the U.S. Bankruptcy Court for the District of Delaware.

According to a statement filed with the court by president, chief executive officer and chief restructuring officer Nishant Machado, Romano’s filed the Chapter 11 cases to implement a balance sheet and operational restructuring “that will allow the debtors to re-emerge as a successful leading casual dining restaurant chain.”

Machado said the company already implemented the initial phase of its turnaround efforts, closing 37 company-operated restaurant locations in 2017.

Romano’s also subleased and assigned other locations that were not generating operating profits over the last several years.

Through the Chapter 11 cases, Machaco said the company seeks to restructure its current liabilities, including damages claims filed by lessors under terminated leases to preserve and maximize value.

Plan coming soon

Machado said Romano’s intends to file a Chapter 11 plan shortly that implements its proposed restructuring and deleverages its balance sheet.

The proposed plan has the support of two of the company’s largest secured creditors, Bank of Colorado and Riesen Funding LLC. According to Machado, those creditors both entered into a restructuring support agreement with Romano’s.

Marketing process

While the company believes the plan will provide the greatest opportunity for it to promptly emerge from bankruptcy and make distributions to creditors, Machado said Romano’s is also currently looking to hire an investment banker to market its companies and assets on a parallel path with the plan process.

If the marketing process identifies a third party that is willing to pay a purchase price that provides greater value for the estate than the proposed plan, Machado said both the restructuring support agreement and the company’s debtor-in-possession financing agreement contain “fiduciary outs” that would allow Romano’s to pursue an alternative sale transaction.

DIP financing

In conjunction with the bankruptcy filing, the company entered into a $5 million DIP financing agreement with Raven Capital Management LLC.

The DIP financing may be converted into exit financing, with the DIP lenders expected to provide up to an additional $8.5 million in available exit financing.

Interest on the DIP loan will accrue at 12%.

The financing will mature on the earliest of 120 days after the bankruptcy filing date, the date that the loan becomes due and payable and the effective date of a Chapter 11 plan.

The company is seeking interim access to $3 million of the DIP financing.

“With a deleveraged balance sheet, a rationalized portfolio of restaurants and a committed lender that supports the debtors’ turnaround efforts, the debtors will be poised to successfully emerge as a positive example for the casual dining industry and will be positioned to increase annual revenue and profitability on a sustainable basis,” Machado said in the statement.

Debt details

According to court documents, Romano’s has $10 million to $50 million in assets and $50 million to $100 million in debt.

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

The company is represented by Young Conaway Stargatt & Taylor, LLP.

Mac Acquisition operates full-service casual dining restaurants. The Chapter 11 case number is 17-12224.

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