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The Bar Louie pub chain has filed for Chapter 11 bankruptcy protection after closing 38 of its 134 locations.

The brand, a holding of Sun Capital Partners, said the filing will facilitate the operation’s acquisition by one of three suitors that submitted letters of intent last month. Those parties were not identified in this morning’s bankruptcy filings.

Simultaneous with the filing, Bar Louie announced that its lenders have agreed to serve as a “stalking horse” bidder, meaning they will acquire the company at a rock-bottom price unless a higher offer is submitted. In exchange for setting a floor for the bidding, the stalking horse’s fees are paid by the acquired concern if another suitor should prevail.

The amount of the stalking horse bid was not revealed.

Bar Louie owes about $110 million to its creditors.

The company attributes its problem to changes in market that rendered the 38 shuttered stores unprofitable. A representative explains in the bankruptcy filing that Bar Louie has raised its sales and profits principally through new openings in recent years. With generated cash and borrowed capital going toward expansion, some stores were denied the funding to renovate and generally upgrade their operations. Meanwhile, many of Bar Louie’s 110 corporate units are located near shopping malls, which saw a precipitious drop in traffic as e-commerce changed consumers’ habits.

“The inconsistent brand experience coupled with increased competition and the general decline in customer traffic visiting traditional shopping locations and malls, resulted in less traffic” at stores located near the retail complexes,” the filing states.

A refresh of the brand brought an improvement in the operations of 72 of the company-run units, the filing continues. But the 38 other corporate stores saw an acceleration in sales and profit declines, resulting in a $4 million loss for that group in 2019.

Bar Louie notes that the now-shuttered unit’s same store sales fell 10.9% for the year, while the 72 other stores posted a slip in comps of 1.4%. Much of the declines, it says in the filing, came in the fourth quarter of last year, when the company curtailed marketing to save money.

The company says the 72 corporate stores that remain in operation are profitable.

"The sale through Chapter 11 will help us to focus on our profitable core locations and expand in areas that have a proven track record of success," Bar Louie CEO Tom Fricke said in a statement.

The chain did not comment on the health of its 24 franchised locations.

The Bar Louie concept is a publike operation specializing in burgers and cocktails. It operates in 26 states.