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Claim Jumper wins confirmation

by Allison Collins | Published September 30, 2011 at 12:59 PM

Unsecured creditors soon will receive distributions from the estate of Claim Jumper Restaurants LLC.

Chief Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Sept. 23 confirmed the liquidation plan of what is now Goldcoast Liquidating LLC, court documents show. A confirmation order had not been entered as of Thursday, Sept. 29.

Secured lenders will receive their pro rata share of leftover cash from the $76.6 million sale of Claim Jumper's assets as soon as practicable after the plan's effective date, court documents show. Secured lenders will receive a recovery of about 54% on their $69.24 million in claims.

Lenders received about $37.3 million from the sale of Claim Jumper to Landry's Restaurants Inc. in December. The estate retained the remaining proceeds.

Holders of general unsecured claims will receive pro rata distributions from a trust funded with $1.84 million of the sale proceeds. The trust also could pursue certain avoidance actions.

Subordinated noteholder Private Capital Partners LLC will receive a single $475,000 distribution from the trust.

The effective date will occur on the first business day after Gross enters a confirmation order, as long as the unsecured creditors' trust has been created.

Gross approved the disclosure statement for the plan on Aug. 3, court documents show.

Landry's won the Claim Jumper chain at an Oct. 28 auction, offering $53.3 million in cash and $23.3 million in assumed debt. The Houston buyer owns the Rainforest Café, Saltgrass Steak House and other restaurants.

Claim Jumper and affiliate Claim Jumper Management LLC (now Goldcoast Management Liquidating LLC) filed for Chapter 11 protection on Sept. 10, 2010.

Their namesake restaurant chain had 45 locations in Arizona, California, Colorado, Illinois, Nevada, Oregon, Washington and Wisconsin as of the petition date, court documents show. The Irvine, Calif., company started in 1977. As of the petition date, the debtors had about 4,600 employees.

To open 10 new locations between 2006 and 2008, the debtors borrowed $59 million under their prepetition credit facilities to fund $62.9 million in construction costs. In 2007, however, the debtors began to experience a decline in profit, coinciding with the economic downturn, according to court documents.

The communities the restaurants serve experienced significant declines in employment, court papers show. The economy also led consumers to cut spending at casual dining restaurants, which hurt the debtors.

In 2009 the debtors defaulted on the prepetition credit facilities.

The debtor listed $93.77 million in assets and $198.92 million in liabilities in court papers.

Prepetition secured lender Wells Fargo Bank NA provided a $5 million debtor-in-possession loan.

Robert Jay Moore, Haig Maghakian and Julian Gurule of Milbank, Tweed, Hadley & McCloy LLP are lead debtor counsel. Moore, Maghakian and Gurule did not return calls for comment.

Laura Davis Jones, Curtis Hehn and James O'Neil are debtor co-counsel at Pachulski Stang Ziehl & Jones LLP in Wilmington are debtor co-counsel. Jones, Hehn and O'Neil also did not return calls.

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Claim Jumper wins confirmation

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