KC restaurant seeks bankruptcy protection

KANSAS CITY, Mo. -- Houlihan's Restaurants Inc., the Kansas City-based casual dining chain, and 11 subsidiaries have filed for Chapter 11 bankruptcy protection.

The Kansas City-based chain, which has closed 28 restaurants since October, says it will restructure its debts, make changes to its operation and focus on restaurants "with the strongest potential for future growth." Daily operations will continue uninterrupted at the 52 restaurants in 17 states that the company continues to operate.

The Chapter 11 filing Wednesday does not include 21 Houlihan's franchise partners, who separately operate 52 Houlihan's restaurants.

Original owners Joseph Gilbert and Paul Robinson teamed up in 1961, bringing together many landmark Kansas City restaurants. Among the notable figures they fed was Ernest Hemingway, who wrote part of his novel "For Whom the Bell Tolls" in a Gilbert-Robinson restaurant.

1991 bankruptcy

The company was sold in 1978 to W.R. Grace & Co. In November 1991, when it was known as Gilbert/Robinson Inc., the company filed for bankruptcy, citing nearly $200 million in debt it had incurred two years earlier in a management-led leveraged buyout.

Next, the chain was controlled by the Glazer family of Florida, owners of the Tampa Bay Buccaneers. It was sold in 1998 to a Dallas-based investment group, which had two other leadership groups before putting former top officials of Einstein/Noah Bagel Corp. in charge in October.

Robert Hartnett, chief executive officer, said that Houlihan's was burdened with too much debt and had been unable to make its debt-service payments.

"When we got here," Hartnett said, "we knew that Houlihan's had drifted some in the last couple of years and had to be repositioned."

Hartnett said the chain planned to revamp the menu "to make sure it's exciting for the consumer."

Past Houlihan's officials attributed part of the company's difficulties to not having enough money to market its restaurants in a period in which it was facing increased competition from more casual-dining chains.

Houlihan's operates under various trade names, including Houlihan's, Darryl's, J. Gilbert's, Bristol, Chequers, Devon and Braxton.

The 52 restaurants employ 5,200 people and posted sales last year of about $150 million. Additional revenues of $5 million came from franchise fees. Hartnett said there were no plans to close any of the remaining 52 restaurants.

Besides Houlihan's Restaurants Inc., the subsidiaries filing for Chapter 11 bankruptcy Wednesday were Houlihan's/Milwaukee Inc., Houlihan's of Chesterfield Inc., Houlihan's of Union Station Inc., Darryl's of Overland Park Inc., Darryl's of St. Louis County Inc., Red Steer Inc., Sam Wilson's/Kansas Inc., Houlihan's/California Inc., Houlihan's/San Francisco Inc., Houlihan's of Farmingdale Inc. and Darryl's of Kissimmee Inc.