Buca di Beppo’s Chapter 11 Filing: A Comprehensive Legal Overview

Introduction

On August 5, 2024, Buca Texas Restaurants, L.P., the operator of the iconic Buca di Beppo chain, filed voluntary petitions for Chapter 11 relief in the Northern District of Texas (Case No. 24-80058 (SGJ)). This restructuring, overseen by Chief Restructuring Officer William Snyder, aims to address declining sales, burdensome leases, and other liabilities. The Debtors emphasize that, despite recent location closures and liquidity constraints, their plan is to continue operating the majority of their restaurants while navigating bankruptcy. According to PR Newswire, the corporate objective is to stabilize operations through debtor-in-possession financing and potentially finalize a value-maximizing sale.

Background and Financial Challenges

Established in 1993 in Minneapolis, Buca di Beppo became known for its family-style Italian dining experience. Over time, the chain grew to dozens of locations, with ownership eventually passing to Planet Hollywood affiliates. Despite its brand recognition, the company experienced declining revenue from $83.5 million in the first five months of 2023 down to roughly $74.8 million during the same period in 2024. Rising food costs, an evolving consumer landscape, and COVID-19 disruptions all contributed to this downward trajectory (Restaurant Business Online). Buca responded by closing 18 underperforming stores in 2024 to cut expenses, but continued liquidity woes necessitated a formal restructuring.

According to Restaurant Dive, Buca’s operational hurdles reflect broader industry trends. Rising labor costs and inconsistent customer demand have pushed many casual dining brands to either pivot or pursue court-supervised restructuring. In Buca’s case, the chain reported an approximate 10% decline in sales from 2023 to 2024 and a steep drop in restaurant-level EBITDA.

Prepetition Debt Structure and Protective Advances

In 2015, Main Street Capital Corporation ("Main Street") provided a $47 million term loan to Buca. By the Petition Date, the Debtors owed close to $39 million in principal and interest. As financial pressure mounted, Main Street extended multiple protective advances totaling $5.05 million to keep operations running prior to bankruptcy. Main Street also exercised control rights over Buca di Beppo’s ownership structure, replacing management and appointing new independent managers in July 2024. William Snyder, from CR3 Partners, assumed the role of Chief Restructuring Officer, focusing on negotiations with creditors and preparing the first day motions.

Notably, Planet Hollywood continued to provide certain management services through an Accounting, Management, and Administrative Services Agreement, although the Debtors are transitioning to a standalone platform. In the weeks leading up to the Chapter 11 filing, the Debtors and Main Street finalized a postpetition financing term sheet that would preserve liquidity and facilitate restructuring.

DIP Financing and Proposed Sale Process

Buca di Beppo secured interim approval for up to $36.3 million in debtor-in-possession (DIP) financing from Main Street, including $12.1 million in new money loans and a $24.2 million roll-up of prepetition obligations. According to Bloomberg Law, this financing—secured by first-priority liens on substantially all assets—ensures continued payment of wages, supplier costs, and other critical expenses. It also accelerates a formal sale process: the DIP documents require the Debtors to file bidding procedures within 8 days of the Petition Date and seek sale approval within 75 days.

The Debtors insist this expedited timetable is necessary to maximize stakeholder recoveries and maintain brand value. The interim DIP order allows Buca to continue honoring customer programs (including gift cards, promotions, and catering arrangements) and maintain a steady supply of inventory through third-party delivery partners. The final DIP approval, granted after overcoming objections from the Official Committee of Unsecured Creditors, positions Main Street as a likely stalking-horse bidder, should no higher offers materialize.

First Day Motions and Key Relief

Chief among the initial court filings are motions to authorize joint administration of the Debtors’ 10 separate legal entities, ensuring efficiency and cost savings for all parties. The Debtors also seek permission to file a consolidated list of creditors, extend the time to file schedules and statements, and protect individual creditors’ personal data from disclosure. These procedural motions aim to streamline case management and reduce administrative costs.

Additionally, the Debtors filed motions to continue utility services, honor prepetition employee wages, and maintain crucial customer programs. Buca employs nearly 3,340 individuals, most of whom rely heavily on wages and tips for day-to-day expenses. The workforce includes both salaried and hourly workers, and certain Las Vegas-based employees are unionized. Under the Wages Motion, Buca seeks approval to pay outstanding payroll, vacation, and healthcare obligations, totaling about $3.7 million prepetition, to avoid attrition and maintain continuity in restaurant operations.

Lease Rejection and Operational Right-Sizing

Before filing for bankruptcy, Buca closed 12 of its 56 restaurant locations. The Debtors now seek to reject the leases for those shuttered sites, which they estimate will save $187,012.98 per month in rent. Any remaining personal property at the rejected locations is deemed of "inconsequential value" and will be abandoned to reduce removal and storage costs. This right-sizing strategy helps align the restaurant footprint with current demand, reducing overhead and enabling the potential buyer to assume only the most profitable sites.

Cash Management System and Intercompany Transactions

Buca’s centralized cash management system relies on 10 active bank accounts for receiving payments and disbursing funds. The Debtors propose to continue these accounts postpetition, arguing that any disruption—such as opening new accounts or segregating existing flows—would cause delays in paying vendors, employees, and utilities. The company also seeks authority to maintain intercompany transactions and a purchase card program that supports standard expense and vendor payments. By preserving these systems, the Debtors avoid operational bottlenecks during the restructuring.

PACA/PASA and Fresh Produce Suppliers

A separate motion asks the Court for permission to pay up to $500,000 in prepetition claims held by suppliers covered under the Perishable Agricultural Commodities Act (PACA) or Packers and Stockyards Act (PASA). Because produce and meat vendors can claim trust protection or potentially disrupt deliveries, the Debtors argue that prompt payment of these obligations is crucial to prevent business interruption. This approach ensures a consistent supply of ingredients and avoids personal liability for officers who otherwise risk violating PACA/PASA trust obligations.

Insurance, Taxes, and Other Operational Motions

Buca’s first day relief requests also include authority to continue paying $1,015,600 in sales, use, and franchise taxes. According to the Debtors, timely remittance of these taxes helps avoid potential regulatory penalties or liens on business assets. The Debtors likewise maintain 13 insurance policies—covering everything from general liability to cyber risk—and finance a portion of these premiums via a separate arrangement with AFCO. They estimate an annual premium cost of $3,465,569.84. Under the proposed motions, the Debtors plan to keep these policies in force to comply with state regulations and satisfy lender requirements.

Finally, an emergency application for the retention of Stretto, Inc. as claims and noticing agent was filed, aiming to streamline administrative tasks associated with mailing, claims processing, and creditor notifications. Ensuring a seamless flow of information is vital, given the volume of potential creditors, employees, and landlords scattered across multiple jurisdictions.

Conclusion

Buca di Beppo’s bankruptcy underscores the ongoing challenges facing the casual dining industry. Despite brand recognition and a loyal customer base, the restaurant chain entered Chapter 11 to address pressing financial and operational hurdles. From the $36.3 million DIP facility to the strategic lease rejections and employee retention measures, the Debtors’ motions reflect a concerted effort to stabilize operations and attract a going-concern buyer. As CBS News notes, Buca di Beppo’s challenges mirror those of other full-service restaurants grappling with steep labor costs and shifting consumer behavior. With Main Street Capital stepping in as the primary lender and DIP financier, the Debtors now have a pathway to either reorganize around a smaller footprint or transition the brand to a new owner—while preserving as much of the beloved Italian dining experience as possible for loyal patrons.