The Las Vegas Hooters resort parent company, 155 East Tropicana LLX, filed for Chapter 11 bankruptcy on August 1 due to the threat of foreclosure, while the staff, including the popular chicken-wing servers, remain employed in the resort, as reported by Vegas Inc. and the Wall Street Journal.
Assets are listed between $10 million and $50 million with over $162 million in liabilities.
Tropicana LLC's sister company, 155 East Tropicana Finance Corporation, has also filed for Chapter 11 protection.
The president of the company, Mike Hessling, said that the filing was made when they could not successfully negotiate a solution with the company's main bondholder. Hessling said, "So we're going to negotiate this way."
Though Hessling didn't name the bondholder, records show that Canpartners Realty Holding Company IV is the main creditor.
Canpartners is based in Los Angeles and is affiliated with Canyon Capitol Realty Advisors.
Canpartners filed a claim against the Las Vegas Hooters property last December. As far back as February of this year, the creditor had threatened to foreclose, with the most recent being on August 8.
The bankruptcy filing is expected to stop the foreclosure.
Records show that the Las Vegas Hooters owes $162 million in mortgage and bond debt - and hundreds more in trade claims.
The initial filing has not indicated exactly what is owed and what the property is worth.
Hessling said that the Hooters name is not affected by the filing and neither are the 650 employees. He said, "The company is throwing off a lot of cash. The place has been busy."
It could, per Hessling, take a year before a plan is voted on, and possibly several more before debt holders and creditors sign off to an agreeable reorganization plan.
The recession is claimed to be the reason the company has failed to service its debt.
After the first quarter of 2010 Hooters stopped filing public finance reports.
The Hooters property was formerly known as the San Remo. Hessling and other investors acquired the land in 2004.
Larger unsecured debt holders are listed as follows: Sysco Food Services for $139,000, NV Energy for $129,000, International Game Technology for $126,000 and Hooters of America for $69,000.
In the bankruptcy announcement the company stated, "We regret that we have been unable to reach an acceptable settlement with our new bondholder. We are confident that an orderly and transparent Chapter 11 process will provide the Company with the opportunity to properly restructure its balance sheet and emerge as a stronger business, while also continuing to operate with no disruption to our customers, employees and vendors. Absent the significant debt payments we're currently obligated to pay, Hooters Casino Hotel is a profitable, successful business and we look forward to completing this process to return our entire focus to running our business and serving our guests."
The statement also read, "This action in no way affects the operation of the more than 430 Hooters Restaurants in 44 states and 27 countries which are owned or franchised by Atlanta-based Hooters of America, LLC."
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