November 27, 2018 – The Debtors requested Court approval of a settlement agreement (the “Settlement Agreement”) reached between (i) the Debtors, (ii) Dine Brands Global, Inc., Applebee’s Restaurants LLC, and Applebee’s Franchisor LLC (collectively, “Applebee’s”), and (c) ACON Equity Partners III, L.P., ACON Franchise Holdings, LLC and any of their affiliated entities and individuals (collectively “ACON”) [Docket No. 816].
The motion states, “Particularly in light of the success of the Debtors’ restaurants in recent months, the Debtors have continued to believe that the best approach to maximize the value of their estates is an approach that preserves the Debtors’ business intact as a single unit and provides for the Debtors’ assumption of their Franchise Agreements….The Debtors recognized that an agreement amongst the Parties would avoid unnecessary litigation, save both time and money and bring finality to disputes that currently have uncertain outcomes. As discussed more fully below, the Debtors, Applebee’s and ACON, after months of often contentious, extensive, good faith, arms’-length negotiations, have reached an agreement embodied in the terms of the Settlement Agreement that removes the barriers to a successful outcome and paves the way for a successful and value maximizing resolution of these Chapter 11 Cases….The Debtors are proceeding on a parallel path. If the Plan is pursued, the terms of the Settlement Agreement will be incorporated into a modified Plan and approval of the settlement can be addressed as part of the confirmation process.”
The material terms of the Settlement Agreement are as follows:
- The Debtors will not close more than five additional locations.
- The Debtors will pay to Applebee’s $12,465,826 on account of their prepetition obligations under assumed franchise agreements as listed on Schedule 1 of the Settlement Agreement
- Applebee’s agrees to consent to and support ACON as the owner and qualified franchisee under the franchise agreements
- Applebee’s shall have an allowed unsecured claim in the total aggregate amount of $17,895,000
- Applebee’s shall support the Plan, or, if the Debtors elect to proceed with a sale process, a sale process that keeps the Debtors intact as a single unit
- Applebee’s shall support ACON as the plan sponsor under the Plan or as the stalking horse bidder in a sale process
- Upon the effective date of the Plan, or the consummation of a sale process, the Parties will release all claims against one another, and will cooperate in the dismissal of the Applebee’s litigation.
The Debtors also requested confidential treatment as to the five planned restaurant closings. [Docket No. 818] The seal motion states, “The Confidential Information that the Debtors are requesting authority to redact and to seal is the list of the five (5) Restaurants that the Debtors may still close, in accordance with the terms of the Settlement Agreement….Disclosure of the Confidential Information pending a decision on whether or not to exit those locations could result in significant harm to the Debtors’ business by, among other things, reducing employee morale and/or causing employees to leave the Debtors’ workforce, hampering the Debtors’ ability to negotiate lease concessions and potentially avoid closures, or revealing to the Debtors’ competitors which of their locations are underperforming.”
Read more Bankruptcy News