WILMINGTON, Del. (Reuters) - The owner of the Joe's Crab Shack casual dining chain filed for Chapter 11 bankruptcy on Tuesday amid falling sales, and plans to sell the company for at least $50 million to a private equity firm, according to a court filing.
Ignite Restaurant Group Inc IRGT.PK, which also owns the Brick House Tavern + Tap chain, has been closing weaker locations and began to pursue a sale of the business last year, according to court documents.
However, as operations continued to worsen through early 2017, interested bidders withdrew their proposals and Ignite began to consider bankruptcy, according to a court filing by Jonathan Tibus, the company's acting chief executive officer.
Ignite filed with the U.S. Bankruptcy Court in Houston a proposal to sell its assets to Kelly Investment Group, a private equity firm. Other interested buyers will be invited to challenge the Kelly bid at a court-supervised auction, according to court documents.
A spokesman for Ignite did not immediately respond to a request for comment.
Ignite owns 112 Joe's Crab Shack restaurants and 25 Brick House locations, according to court documents. The Crab Shack chain was founded in Houston in 1991 and Brick House was launched in 2008.
The company has a $30 million revolving credit facility and a $165 million term loan, according to a court filing.
Casual dining chains have struggled with changing tastes. Cosi Inc and Roadhouse Holding, which owns the Logan's Roadhouse chain, filed for bankruptcy last year.
Kelly Investment bought the Champps Kitchen & Bar and Fox & Hound chains out of bankruptcy last year.
Shares of Ignite, which went public in 2012, were up 3.8 percent at 2.5 cents in pink sheet trading. The company is majority-owned by an affiliate of J.H. Witney & Co, an investment firm.
Editing by Matthew Lewis