Del Taco Restaurants said on Friday that it is in danger of having its stock delisted following the resignation of one of its directors, Patrick Walsh.
The loss of Walsh left the company short of the number of independent directors required to qualify for its listing on the Nasdaq Stock Exchange. The company said it is required to have a majority of board members be independent, and Walsh’s departure left its seven-person board with just three independent members: Joseph Stein, RJ Melman, and Eileen Aptman.
Del Taco will almost certainly not lose its stock listing, a relative rarity. The company has a year to fix the problem.
Del Taco did not name a replacement for Walsh and instead said in a federal securities filing that it plans to review whether Lawrence or Ari Levy could currently qualify as independent directors.
Lawrence Levy is the company’s chairman and founder of Levy Restaurants. The younger Ari Levy is managing partner of the investment firm Levy Family Partners. The two engineered a reverse merger with Del Taco that took the fast-food chain public in 2015.
Del Taco said it plans to review “transactions or relationships” between the company and the Levys to determine if they would qualify as independent. The company said that employment relationships with the Levys “terminated more than three years ago.”
The departure of Walsh comes at a time when Del Taco is considering a sale and could get offers from a number of potential buyers, both strategic acquirers such as Applebee’s owner Dine Brands Global and investors like private equity groups.