TGI Fridays, an American casual dining chain, has filed voluntary petitions for Chapter 11 bankruptcy protection in the Northern District of Texas.

According to Reuters, this decision comes due to ongoing financial struggles and a failed deal with UK company Hostmore.

In its filing with the US Bankruptcy Court for the Northern District of Texas, the company reported assets and liabilities between $100 million and $500 million.

The company plans to use the time and legal protections provided by the Chapter 11 restructuring process to explore strategic alternatives aimed at ensuring the brand's long-term viability.

The ownership of the TGI Fridays brand and its "related intellectual property" rests with TGI Fridays Franchisor as a result of an agreement with a separate investor group. These entities are not part of the Chapter 11 process.

In September, British restaurant operator Hostmore abandoned its plans to acquire TGI Fridays after being removed as the manager of TGIF Funding, which holds the rights to collect royalties from the restaurant chain franchise, according to Reuters.

Hostmore, which managed TGI Fridays in the UK through its subsidiary Thursdays (UK), experienced a 90% drop in its shares following the announcement and subsequently declared its intention to enter administration due to overwhelming debt.

TGI Fridays Franchisor has franchised the brand to 56 franchisees across 41 countries. All locations, both in the US and internationally, remain independently owned and are not included in TGI Fridays' bankruptcy process. These restaurants are continuing operations and serving customers as usual.

To maintain support services for its franchisees during this transition, TGI Fridays Franchisor has established a Transition Services Agreement and provided interim funding to TGI Fridays. This support will help implement a new long-term structure for franchise operations.

In addition to supporting franchise restaurants, TGI Fridays will continue operating its corporate-owned locations in the US. The company has secured debtor-in-possession financing to ensure ongoing operations throughout the Chapter 11 process.

TGI Fridays has also filed motions with the Bankruptcy Court to maintain customer programmes in the normal course. These motions are expected to be reviewed and approved in the early days of the case.

Rohit Manocha, executive chairman of TGI Fridays, said: "The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world".

He continued: "The primary driver of our financial challenges resulted from Covid-19 and our capital structure. This restructuring will allow our go-forward restaurants to proceed with an optimised corporate infrastructure that enables them to reach their full potential."

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