Hooters, Junior Creditors Reach $4.5 Million Deal in Bankruptcy

Hooters of America LLC reached a $4.5 million global settlement with creditors that weren’t expected to recover anything under the casual dining chain’s bankruptcy plan.

The deal includes $3 million allocated to creditors and $1.5 million for professional fees and expenses, an attorney representing a committee of unsecured creditors said during a Tuesday hearing in the US Bankruptcy Court for the Northern District of Texas.

There will be $125,000 in initial funding deposited into a litigation trust, including Hooters’ unsecured assets, Judith Elkin of Pachulski Stang Ziehl & Jones LLP said. Unsecured and secured creditors are each allocated 37.5% of those funds, with the majority of the remaining funds going to the priority lenders, Elkin said.

Unencumbered assets won’t be included in the trust, allowing further investigation to continue, she noted.

An amended proposal will be filed reflecting the settlement that was reached, among other agreements, said Rahmon Brown of Ropes & Gray LLP, representing Hooters.

The committee had objected to Hooters’ reorganization proposal earlier this month, leading to eleventh hour negotiations ahead of the hearing.

Judge Scott W. Everett conditionally approved Hooters’ bankruptcy plan disclosures during the hearing over an objection from the Justice Department’s bankruptcy watchdog, the US Trustee.

Hooters filed for Chapter 11 in March following a decline in profitability due to inflation, industry headwinds, and an unsustainable capital structure, according to court records. It is among a growing number of casual dining chains seeking bankruptcy protection in recent years.

Hooters is also represented by Foley & Lardner LLP.

The case is Hooters of America LLC, Bankr. N.D. Tex., 25-80078, hearing 6/17/25.