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Bennigan's, Steak & Ale file for bankruptcy

LOS ANGELES (Reuters) - The company that runs Bennigan’s and Steak & Ale chains filed for one of the largest restaurant bankruptcies ever on Tuesday and closed several hundred restaurants, costing thousands of workers their jobs.

A Bennigan's Grill and Tavern in Arvada, Colorado March 15, 2005. REUTERS/Rick Wilking

S&A Restaurant Corp, and three dozen other entities, including various Bennigan’s and Steak & Ale affiliates, submitted Chapter 7 bankruptcy petitions in the U.S. Bankruptcy Court for the Eastern District of Texas.

Stores operated by franchisees are not named as debtors in the filing. The filing also does not include Ponderosa and Bonanza, which operate under Metromedia Steakhouses Co LP, S&A spokeswoman Leah Templeton said.

The bankruptcy petition underscores how economic weakness and rising costs in the United States are squeezing mid-tier restaurants. The restaurant chains have grappled with higher food and labor costs while U.S. consumers are trying to cope with higher grocery and gas bills.

S&A is a subsidiary of Metromedia Restaurant Group and operates and franchises Bennigan’s and Steak & Ale restaurants. The companies fall under the umbrella of billionaire John Kluge’s privately held Metromedia Co.

It was not immediately clear how many Bennigan’s and Steak & Ale restaurants would be closed.

While companies often file for Chapter 11 bankruptcy protection which allows them to restructure while holding creditors at bay, S&A filed for Chapter 7 bankruptcy, which allows assets to be liquidated.

LOTS OF BURGERS ... AND FLAIR

Bennigan’s Tavern and Grill was founded in 1976 and has restaurants in 32 states. Steak & Ale was founded in 1966. Bennigan’s has roughly 300 restaurants in its chain, but a full count for Steak & Ale chain was not immediately available.

Bennigan’s employees were known for their cheerful birthday singing and “flair” -- decorations worn on their uniforms.

Managers at company-owned Bennigan’s locations throughout the United States, including Chicago, New Jersey, Miami and the Dallas area, all said their company-owned restaurants were closed.

In June, Metromedia Restaurant Group said it was working on a debt restructuring plan.

That announcement came after the Wall Street Journal said the company was in talks with lender GE Capital Solutions and that it had prepared a bankruptcy filing in the event it was needed.

“In light of today’s filing, we are reviewing our options and we have worked cooperatively and constructively with Metromedia in arriving at a solution that takes into account the rights and obligations of interested parties,” said Stephen White, a spokesman for General Electric Co’s capital solutions unit. That GE unit provided leasing and secured financing on about 90 of the company’s 750 restaurants.

GE declined to disclose the amount of Metromedia’s debt.

Other family dining and steakhouse restaurant chains have filed for bankruptcy protection this year, including the largest U.S. steak-buffet restaurant company Buffets Holdings, Steakhouse Partners Inc, and VICORP Restaurants Inc, which runs the Bakers Square and Village Inn restaurant chains.

Reporting by Brad Dorfman, Emily Chasan, Scott Malone, Jonathan Stempel, Patrick Fitzgibbons and Lisa Baertlein; Editing by Lisa Von Ahn, Toni Reinhold

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