The operator of Ruby's Diner announced plans Wednesday to sell a 60 percent ownership stake in the Newport Beach-based company to outlet mall developer -- and Ruby's franchise owner -- Steven L. Craig as part of debt-reorganization agreement.
The company filed a Chapter 11 bankruptcy petition in Los Angeles to formally restructure its debt, and it hopes to have the reorganization completed in four to six months, officials said. The filing only included four company-owned Ruby's locations in Huntington Beach, Laguna Hills, Oceanside and Palm Springs.
The remaining 28 Ruby's locations are franchises and are not included in the bankruptcy filing, according to the company. No restaurant operations are expected to be impacted by the reorganization.
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"Our restaurants are open and customers can continue to rely on Ruby's for great food and excellent customer service," Ruby's CEO Doug Cavanaugh said. "We will continue to sell and honor all customer gift cards and our Ruby's Rewards program remains in place."
Cavanaugh said that in dealing with a "changing industry" in recent years, Ruby's "suffered some financial setbacks from which we have been working to recover."
"For the most part, we have been successful," he said. "We believe the agreement (with Craig), once implemented, will significantly improve our capital structure and provide Ruby's the best opportunity for long-term success. Specifically, all employees, franchisees, guests and vendors will be paid on a prompt and timely basis going forward and our restaurants will remain open."
The reorganization will result in Craig owning 60 percent of the company. Craig is the founder of Newport Beach-based Craig Realty Group. He owns the Ruby's franchise at the Outlets at San Clemente, which his firm developed. The company is also behind the Citadel Outlets and malls in Barstow, Cabazon, Phoenix, Denver, Honolulu, Texas, Colorado, Missouri, Wisconsin and Utah.