Hooters Junior Creditors Challenge Zero-Recovery Bankruptcy Plan

Hooters of America LLC’s unsecured creditors objected to a reorganization proposal they say offers them no recoveries and no chance to vote on the plan.

Unsecured creditors wouldn’t be any better off under the casual dining chain’s restructuring plan than if it liquidated, a committee representing the junior creditors said in an objection filed June 6 in the US Bankruptcy Court for the Northern District of Texas.

Hooters’ proposed plan gifts all of the value of the company’s unencumbered assets to its pre-bankruptcy lenders and hands out litigation releases against some of those lenders and insiders, unsecured creditors said. The ...