Buffets seeks approval to close 127 restaurants, reject 129 leases

New York, July 10 - Buffets Holdings, Inc. said it has asked the U.S. Bankruptcy Court for the District of Delaware for permission to reject a master land and building lease for 129 of its restaurants. The motion also seeks authorization to close 127 of these locations by the end of August. The other two are already closed.

Buffets said it has already successfully concluded lease negotiations with landlords for its other locations.

It added that it has sought modifications to the "onerous" master lease from various affiliates of Fortress Investment Group LLC, the holders of the master lease, which would permit some or all of the 127 restaurants to remain open. While those negotiations have not been productive, Buffets said it continues to explore a consensual resolution.

A hearing for the lease rejection motion has been scheduled for July 30.

Arguing its case, Buffets claims the lease has above-market rents, mandatory annual rent increases of 2% or more, and other "onerous" provisions that provide little recourse when units perform poorly.

All but seven of the restaurants covered by the master lease operate under the Ryan's or Fire Mountain brand names. The 127 restaurants have 7,500 full and part-time employees.

Buffets Holdings, a steak-buffet restaurant company based in Eagan, Minn., operates restaurants under the names Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain. The company filed for bankruptcy on Jan. 22, 2007, and its Chapter 11 case number is 08-10141.

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