Ruby Tuesday has been given a go-ahead by the bankruptcy court overseeing its Chapter 11 filing to commence an auction for the sale of the company or its parts, with bids due by the end of the business day on Jan. 14.
The bankrupt parent of Ruby, RTI Holdings, has until Dec. 10 to find a “stalking horse” to effectively set a floor for the bidding. With a stalking horse offer, the bidder is entitled to reimbursement for most expenses related to making the initial bid if a higher offer is subsequently submitted.
RTI has indicated that potential bidders could include Goldman Sachs Group and The TCW Group, a financial management concern. Both are secured lenders to RTI, whose debts are pegged by bankruptcy filings at $56.1 million. A majority of that sum is owed to the two finance companies, according to press reports.
Goldman Sachs has just made an unspecified investment in Zaxby’s.
RTI’s bankruptcy filings indicate that the company is willing to be sold whole or in part.
Permission to proceed with a sale was granted by the U.S. Bankruptcy Court of Delaware after it decided in RTI’s favor on the question of which party owns the assets of a so-called “rabbi trust” that was set up 35 years ago to provide certain retired employees with pension funds. The court ruled last week that RTI was entitled to the trust’s assets, which amount to about $22.5 million in insurance policies and cash.
A sale of all or major parts of Ruby Tuesday would be another major development in the story of a 48-year-old brand that has rattled through one significant change after another in recent years. The casual-dining pioneer has gone through a half-dozen CEOs since early 2017. It was acquired for $335 million by NRD Capital, the private-equity firm of franchise veteran Aziz Hashim, in October 2017.
At the time, the Ruby Tuesday chain consisted of 541 restaurants, down from an all-time high of 840 units. Today, the brand extends to 236 U.S. locations.
The brand has been struggling for much of the past decade. It opted for Chapter 11 bankruptcy protection after the pandemic wiped out dining room sales.