Hooters Creditor Sues Over Unpaid Royalties in Bankruptcy Court

Lags Equipment LLC, which says it’s a secured creditor and royalty interest owner in Hooters of America LLC’s Chapter 11 case, sued in bankruptcy court, alleging the company and lenders ignored its rights.

Hooters—known for its all-female wait staff clad in orange shorts—and the chain’s lenders attempted to invalidate Lags’s rights of ownership and priority, which it has owned for over 36 years, Lags said in a Tuesday complaint in the US Bankruptcy Court for the Northern District of Texas.

As a result, Lags is alleging $2 million in damages of unpaid royalties and tortious interference with its contracts, seeks ...