A struggling Applebee’s franchisee has been forced into Chapter 11 bankruptcy by its lender, which is hoping to claw back assets that are no longer in the operator’s control.
According to bankruptcy documents filed last week, Miami-based Louisiana Apple previously operated 14 Applebee’s restaurants in Kentucky, Oklahoma, Indiana and Arkansas. Those restaurants were listed as collateral on the company’s loan from City National Bank of Florida (CNB), but are now in the possession of Applebee’s, which terminated its franchise agreement with Louisiana Apple earlier this year.
CNB this month successfully petitioned for a receivership that will work to get those restaurants back through the bankruptcy process. The bank could then choose to sell or continue operating the restaurants, which it argues were illegally transferred to Applebee’s.
Louisiana Apple is owned by Seenu Kasturi, who is also the CEO of ARC Group, the owner of Dick’s Wings, Tilted Kilt and other restaurant brands.
In September of 2020, the company took out a $7.1 million loan with CNB. Around the same time, other Kasturi-owned restaurant entities took out a number of paycheck protection program (PPP) loans with CNB to help them get through the pandemic.
According to the bankruptcy filing, Louisiana Apple has not made payments on the initial CNB loan since July 28, 2023, and a forbearance agreement between the bank and the restaurant operator expired in May of this year. As of Aug. 15, Louisiana Apple owed CNB more than $8.3 million, according to the bankruptcy filing.
Meanwhile, Louisiana Apple had also allegedly stopped paying royalties to its franchisor. On July 1, 2024, Applebee’s sued Louisiana Apple over $4.8 million in unpaid royalties and the unauthorized closure of two restaurants in Oklahoma and Arkansas, which Applebee’s argued would cost it another $1.6 million in future royalty payments.
The franchisor then seized control of Louisiana Apple’s 14 remaining restaurants, citing terms of the franchise agreement. The two sides settled the lawsuit on July 10.
A month later, four affiliates of Louisiana Apple sued the U.S. Small Business Administration, claiming that they were illegally denied forgiveness of part of their PPP loans from 2020.
Taken together, the court filings paint the picture of a company that required financial help to get through the pandemic but struggled to repay its debts after the crisis had subsided. In that sense, it’s similar to many of the dozens of other restaurant companies that have filed for bankruptcy this year as pandemic aftershocks continue to rock the industry.
But Louisiana Apple’s case is unusual in that it was forced into bankruptcy and has no assets to speak of, as they are now in the hands of Applebee’s.
The 1,636-unit casual-dining brand has generally struggled over the past year as consumers have become more careful with their spending. In the second quarter, the chain’s same-store sales declined 1.8%.
Applebee’s parent Dine Brands had not responded to a request for comment as of publication time.
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