Layoffs Could Hit Ignite Restaurant Group in August
As soon as August 22, corporate cuts could be coming for employees at Ignite Restaurant Group. In a letter to the Texas Workforce Commission, the parent company of Joe’s Crab Shack and Brick House Tavern + Tap said it could layoff as many as 87 employees at its corporate headquarters.
Ignite filed for Chapter 11 bankruptcy protection in early June, an announcement that was accompanied by the news that Kelly Companies bid $50 million in cash for both brands. Ignite also filed a motion for the implementation of bidding procedures to allow other companies to submit bids through a court-supervised process to purchase the assets being sold. Then, a couple of weeks later, Houston-based Landry’s Inc. announced its $55 million bid.
Court filings showed that Landry’s offered $60 million before the deal with San Diego-based private equity company Kelly Cos, but later requested a price reduction. The new offer from Landry’s includes a $10 million good-faith deposit, which bests Kelly Cos 2$ million deposit ($1 million was paid initially). The process is being overseen by Piper Jaffray & Co.
Landry’s is run by Tilman Fertitta, who owned Joe’s Crab Shack in the 1990s before it was sold in 2006 to JCS Holdings LLC for $192 million.
Ignite said it might cut corporate jobs regardless of what happens. This includes a sale, no deal, if the brand is dissolved under a Chapter 11 plan of liquidation, and if the Chapter 11 case turns into a Chapter 7 one. The Worker Adjustment and Retraining Notification Act letter identified the period between August 22 and September 5 for the layoffs. However, Ignite added in the letter, if a sale goes through the new owner could save some of those jobs and “the prospective buyer of Ignite’s assets may want to hire many of Ignite’s employees.” But if the sale is not completed, “Ignite’s future will be uncertain,” which will be true of its corporate employees as well.