Inside the Chapter 11 restructuring that preserved an iconic brand

A legacy brand under pressure

Hooters, a well-known American restaurant brand with a broad domestic and international footprint – known for its world-famous chicken wings, beverages, live sports, and legendary hospitality – was under increasing pressure.

The company’s first step toward stabilization was a difficult one: closing 44 company-owned restaurants. Management then launched a comprehensive operational review focused on unit-level economics, cost structure, and the balance between company-owned and franchised locations.

They found that, like many legacy restaurant groups, Hooters was facing:

• Persistent margin compression driven by rising labor and commodity costs
• Underperforming company-owned locations weighing on results
• Operational complexity from a large, geographically dispersed owned-store base
• Liquidity pressure, deferred capital investment and limited marketing spend
• Strained supplier relationships from extended payables
• A capital structure misaligned with the brand’s next phase

Hooters began actively addressing these issues in 2024. After a covenant default in June of that year, we joined as Chief Restructuring Officer to stabilize liquidity and evaluate strategic alternatives, alongside Ropes & Gray and SOLIC. Together, we assessed an operational turnaround, a debt restructuring, and a sale of the business (which, at that time, owned and operated 151 restaurants and supported an additional 154 franchised locations across the US and 17 countries worldwide).

Our assessment pointed to a clear path: selling the corporate-owned restaurants to franchise operators with the experience and expertise to address Hooters’ challenges.

Chapter 11 as a path to reinvention

Bankruptcy doesn’t have to signal failure. It can be a real catalyst for transformation.

For consumer brands like Hooters facing inflation, shifting preferences, and capital constraints – here compounded by a complex whole-company securitization, dark-store lease liabilities, and legacy litigation exposure – a court-supervised restructuring can enable changes that are difficult to achieve out of court. In this case, an out-of-court solution actually risked vendor disruption, operational instability, and long-term brand erosion.

The Chapter 11 strategy focused on:

• Operational continuity: Maintaining uninterrupted restaurant operations and vendor confidence throughout the process.
• Employee and culture preservation: Supporting frontline teams and leadership while protecting the service culture central to the brand.
• Vendor and supply chain stability: Preserving supply chain integrity to ensure consistent execution and guest experience.
• Brand stewardship: Managing the public narrative to position the filing as a strategic reset rather than a distress event.
• Portfolio optimization: Creating flexibility to address uneconomic leases while protecting high-performing locations.
• Operating model evolution: Advancing the transition to a scalable, franchise-driven, asset-light model aligned with long-term economics.
• Strategic reinvention: Using the process to reassess the brand’s core identity and refocus the concept for sustainable growth.

Setting the stage for a successful filing

We led months of diligence, analysis, and negotiation that enabled Hooters to enter Chapter 11 with a clear roadmap rather than a “free-fall” case.

Before filing, the brand:

• Closed 48 additional underperforming company-owned restaurants
• Established a framework for a guest-focused training program at remaining locations
• Expanded the brand beyond the four walls, including a 2024 grocery licensing agreement reaching approximately 1,250 stores nationwide
• Ran a structured market process led by SOLIC with:
  • 95 parties contacted
  • 38 confidentiality agreements executed
  • 6 parties expressed comprehensive interest
  • 3 formal proposals submitted

In parallel, we triaged pre-petition liquidity, managed creditor communications, and secured incremental bridge financing to fund operations and negotiations – allowing the Chapter 11 filing to function as execution of an agreed path, not the start of negotiations.

By March 2025, the RSA provided:

• A defined timeline to exit Chapter 11
• Commitments from a substantial majority of creditor stakeholders
• A three-pronged operational reset focused on footprint restructuring, a franchise-only model, and renewed emphasis on brand and guest experience

The bankruptcy challenges – and how we tackled them

Executing Chapter 11 required discipline across operations, liquidity, legal structuring, and stakeholders – under compressed timelines and with little room for error. Standout challenges included:

• A complex capital and legal structure

Hooters’ whole-business securitization split the business between restaurant operating entities and a corporate manager, each with its own debt stack and stakeholders. Working with Ropes & Gray, we reconciled creditor interests while keeping both sides of the business funded and operational.

• Declining performance at company-owned restaurants

Weaker sales at company-owned locations pressured cash flow during the restructuring. We prioritized targeted reinvestment, stabilized operations, and coordinated the transition of corporate-owned restaurants to experienced franchise operators, including structuring and executing asset transfers with Ropes & Gray.

• Acute liquidity pressure
  Limited cash constrained turnaround efforts and increased execution risk. We implemented disciplined cash management, oversaw the 13-week cash flow, managed disbursements, and ensured DIP covenant compliance – building lender confidence through consistent performance against forecast.
• Significant legacy liabilities
  Legacy claims and lease obligations required a court-supervised solution. We guided management through Chapter 11 requirements, reporting, and court milestones while maintaining day-to-day operations.
• Coordinating a multi-party transition
  Transitioning restaurants from corporate-owned to franchise-operated required close coordination among buyers, lenders, and management. We supported the development of Transition Services Agreements and implementation plans to ensure a smooth operational handoff.

The wins

The combined pre- and post-petition work led to:

• Over 100 corporate-owned restaurants sold to experienced franchise operators, preserving thousands of jobs
• Legacy dark-store lease obligations and litigation liabilities addressed through Chapter 11
• Lender value preserved through an asset-light, franchise-only model
• A funded litigation trust and unsecured creditor pool providing transparency and recovery

In the end, Hooters emerged with:

• A leaner, franchise-only footprint
• Renewed focus on operational excellence and guest experience
• A capital structure aligned with long-term brand stewardship

The takeaway

For restaurant and consumer brands, Chapter 11 – when approached proactively and executed with discipline – can right-size the footprint, protect brand equity, and create a durable platform for growth.

At Accordion, we partner with sponsors, companies, and stakeholders to navigate these inflection points, helping leadership turn disruption into durable momentum.