By Katy Stech Of DOW JONES DAILY BANKRUPTCY REVIEW The financially struggling operator of Old Country Buffet, Ryan's and HomeTown Buffet restaurants plans to pay $4 million to a pool of creditors who are owed more than $44 million at the end of its Chapter 11 bankruptcy case, which will cut the chain's debt with the hope of keeping its roughly 400 remaining restaurants alive. Under a tweaked reorganization plan filed to the court Friday, Buffets Restaurants Holdings Inc. (BUFRQ) said that unsecured creditors--a group that includes landlords and suppliers like Coca-Cola Co. (KO)--were supposed to receive nothing once the company reorganizes its finances, according to papers filed in U.S. Bankruptcy Court in Wilmington, Del. The company filed for bankruptcy protection Jan. 18 with a plan to shut about 80 money-losing restaurant locations and hand over part of its ownership to lenders who, in turn, agreed to forgive about $250 million in debt. That move would cut the chain's loan debt to a level it said it can afford to pay off amid the tough economic times, according to court papers. The latest move would strengthen the company's finances after an earlier bankruptcy reorganization in 2008, which shook some $600 million worth of debt from the company's balance sheet. "Although the [company] reduced a significant amount of their longterm debt under their prior Chapter 11 plan and closed certain unprofitable locations, [the company and its affiliates] have continued to be adversely affected by the sluggish U.S. economy," the company said in court papers. Unsecured creditors, who would recover about 9% of their claims under the latest proposal, still have the ability to reject that plan with a vote. The company has asked a bankruptcy judge for permission to send out a summary of the Chapter 11 plan at an April 30 hearing. The proposal would allow the company to emerge from bankruptcy protection and begin making smaller debt payments by the end of June, according to court papers. The Eagan, Minn., chain offers an all-you-can-eat menu with more than 100 menu items, salads, casseroles and steak. It feeds 2.7 million customers per week, a number that has fallen since the economic sluggishness kept unemployment levels high and people from eating out as frequently, according to court papers. The company had about 22,800 employees when it filed for bankruptcy. (Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.) -Katy Stech, Dow Jones Daily Bankruptcy Review; 202-862-1344; katherine.stech@dowjones.com
