Bain-Backed Sushi Chain Files for Bankruptcy, Seeks Sale

(Bloomberg) -- The entity behind Bamboo Sushi and QuickFish, a small group of seafood restaurants backed by Bain Capital’s impact investing strategy, will try to sell itself through bankruptcy after the virus lockdown strained its finances.

Sustainable Restaurant Holdings operates 10 restaurants in the western U.S., Interim Chief Executive Officer Matthew Park said in a court declaration. The restaurants feature environmentally-conscious designs including reclaimed timber, low-flow water systems and draw their energy from renewable sources, he said.

All 10 restaurants have ceased normal operations and three shifted to take-out and delivery, but the company still isn’t generating enough cash to keep up with obligations during Covid-driven lockdowns, Park said. The company reported about $18 million in revenue last year and listed no more than $10 million of liabilities in the bankruptcy filing, according to court papers.

BMO Capital Markets began trying to sell the business in March, but no bidders have emerged, Park said. SSG Capital Advisors LLC is continuing to market the business in bankruptcy.

Bain Capital Double Impact Fund owns about 35% of the company’s shares, while founder Kristofor Lofgren owns about 42%, according the bankruptcy petition filed in Delaware.

Bain Sued

Lofgren in April sued Bain, affiliated entities and one employee, alleging the private equity firm breached its fiduciary duty and accusing it of attempting to “loot the corporation” through a down round of financing, financial restructuring or bankruptcy, according to a copy of the complaint provided by Lofgren’s lawyers.

Lofgren, who was removed from his position of chief executive officer, alleges Bain threatened to withhold an agreed-upon investment if profitability didn’t quickly improve and attempted a hostile takeover of the restaurant group, according to the complaint.

“Mr. Lofgren’s amended complaint is yet another attempt to manipulate and pressure Sustainable Restaurant Holdings (SRH) into paying him money he is not owed,” a representative for the company said in a statement. “The fact remains that following a routine audit, the SRH board determined that actions by Mr. Lofgren constituted cause for his termination as chief executive officer.”

A representative for Bain and attorneys for Lofgren declined to comment.

The case is Sustainable Restaurant Holdings Inc., 20-11087, U.S. Bankruptcy Court for the District of Delaware (Delaware)

©2020 Bloomberg L.P.