A bankruptcy judge has authorized the operator of casual restaurant chains Village Inn and Bakers Square to start tapping a $20 million chapter 11 loan to fund the business as it explores a potential financial restructuring, WSJ Pro Bankruptcy reported. The loan to restaurant operator American Blue Ribbon Holdings LLC will keep the lights on as the Nashville, Tenn.-based company begins chapter 11. Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., authorized Blue Ribbon to draw up to $10 million from the loan, which is being provided by the company’s majority owner, Cannae Holdings Inc. The court will consider authorizing use of the rest of the loan at a later hearing, which is common in chapter 11. Jonathan M. Weiss, a bankruptcy lawyer representing Blue Ribbon, said during a court hearing that the restaurant operator planned its chapter 11 filing after its direct corporate parent, which isn’t part of the bankruptcy, declined to continue funding the business. The company pivoted to bankruptcy so the business could gain access to debtor-in-possession financing to keep funding the business, Mr. Weiss said. The company filed for chapter 11 on Monday. Blue Ribbon will now explore its strategic alternatives in chapter 11, Weiss said. The company closed 33 Village Inn and Bakers Square locations and laid off about 1,100 employees before filing for chapter 11, court papers say.
