Bennigan’s files for Chapter 7

Casual dining chain Bennigan’s Grill & Tavern, owned by Metromedia Restaurant Group, filed for Chapter 7 bankruptcy Tuesday, closing company-owned stores.

It was unclear which of the five Bennigan’s locations in the Washington and Baltimore regions were affected. Only the Bennigan’s in Glen Bernie, Md., answered its phone, saying it was franchise-owned and open for business. . . more

Bennigan's owner working on plan to avoid bankruptcy

LOS ANGELES, June 4 (Reuters) - Metromedia Restaurant Group on Wednesday said it is working on a debt restructuring plan, a move that could help the operator of struggling chains like Bennigan's and Steak and Ale avert a potential bankruptcy.

The announcement came on the heels of a Wall Street Journal report that the unit of billionaire John Kluge's privately held Metromedia Co was in talks with GE Capital Solutions and that the restaurant owner had prepared a bankruptcy filing in the event it was needed.

"Metromedia Restaurant Group is currently in the process of formulating a proposal to present to its lenders to restructure its indebtedness," the company said in a statement, which underscored that the company "has neither filed for bankruptcy nor prepared a bankruptcy filing."

The Journal report cited three people familiar with the matter and said the restaurant group had violated several terms of its lending agreement earlier this year, prompting GE Capital to declare a default and accelerate payments.

GE Capital is a unit of General Electric Co (GE.N: Quote, Profile, Research). Metromedia did not answer calls seeking comment. A GE spokesman declined to comment.

Metromedia hired California bankruptcy lawyer Jeff Reisner a few months ago, the Journal said, citing two people familiar with the matter. Reisner did not immediately return a call for comment.

The newspaper said Metromedia Restaurants' chief executive Clay Dover left abruptly last week, citing differences with ownership.

Casual dining chains have suffered because of the U.S. economic slowdown.

Some struggling operators, including Village Inn and Bakers Square owner privately held VICORP Restaurants Inc, have already filed for bankruptcy protection.

Source: Business Week