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CraftWorks Gets Six-Week ‘Life Support’ to Survive Coronavirus

March 30, 2020, 7:18 PM

CraftWorks Parent LLC, the bankrupt owner of restaurant chains such as Logan’s Roadhouse and Old Chicago Pizza, got court approval to put the company’s bankruptcy “on life support” for six weeks in response to the new coronavirus.

“The unprecedented outbreak of Covid-19 has wreaked havoc on the country as a whole and particularly on the restaurant industry,” CraftWorks’ attorney, Steven J. Reisman of Katten Muchin Rosenman LLP, said at a teleconference Monday in the U.S. Bankruptcy Court for the District of Delaware.

The order for temporary measures, which the company revised twice since March 20 in response to feedback from landlords, creditors, and the court, will allow the company to reduce unnecessary expenses until the pandemic passes.

Judge Brendan L. Shannon said he would sign the order after confirming at the hearing that the company’s lenders, landlords, and a committee of unsecured creditors were all on board.

Government mandates aimed at stopping the outbreak of Covid-19, the disease caused by the virus, forced CraftWorks to close all 261 restaurants and furlough 18,000 employees, and sent the company into default with its lender March 18, Reisman told the court.

Further straining matters, the company discovered that on March 19, then-CEO Hazem Ouf and then-CFO James Lebs paid $7 million in sales taxes to various authorities without the consent of the company’s lenders or financial adviser, the company alleged at the hearing and in a motion.

CraftWorks has since worked out a new deal with its lender, Fortress Credit Co. LLC and its affiliates, for six weeks of debtor-in-possession financing, Reisman said.

The company hopes to restart 125 locations and bring back employees sometime in the future, Reisman said. In the meantime, the restaurant chain has scaled back to 25 critical employees.

CraftWorks had 338 restaurant locations in 39 states, Washington, D.C., and Taiwan when it filed for bankruptcy March 3.

The case is CraftWorks Parent, LLC, Bankr. D. Del., No. 20-10475, Hearing 3/30/20.

To contact the reporter on this story: Leslie A. Pappas in Wilmington, Del. at

To contact the editor responsible for this story: Seth Stern at