Star Buffet, Inc. announced today that the company, along with its wholly-owned Summit Family Restaurants Inc. subsidiary, has filed for a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court in the state of Arizona (“Bankruptcy Court”). The company will continue to operate in the ordinary course of business as “debtor-in-possession” under jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. No other subsidiaries of the company are impacted by this filing.
The decision to file bankruptcy was reached after the company was unable to agree on terms for payment of a $723,489.02 judgment against the company. The company plans to appeal the judgment. Additionally, although the company is profitable and has significant equity in its real estate portfolio, it has been unable to refinance current mortgage obligations or a Wells Fargo secured credit facility due in January, 2012.
The company’s consolidated balance sheet as of August 15, 2011 showed assets of $22.4 million and liabilities of $21.4 million. For the last fiscal year, the company had annual revenues of approximately $53.0 million. At the time of the filing, the company was current in its payment obligations on its $5.6 million Wells Fargo secured credit facility and $5.4 million in mortgage loans. The company believes that cash flow from operations will provide it and its subsidiaries with sufficient liquidity to meet their post-petition obligations and maintain normal operations. The company plans to aggressively pursue its planned exit financing strategy.