NRPF Group Two - Chapter 11 Case Summary

Business Description

Headquartered in Atlanta, GA, NRPF Group Two, LLC ("NRPF"), together with Neighborhood Restaurant Partners Florida, LLC ("NRP FL") and Neighborhood Restaurant Partners Florida Two, LLC ("NRP FL 2") (collectively, the "Debtors"), are franchisees operating Applebee's Neighborhood Bar & Grill ("Applebee's") restaurants across Florida, Georgia, and Alabama.

• Applebee's is a prominent American casual dining restaurant chain operating over 1,500 locations worldwide, offering affordable, traditional American comfort food alongside cocktails in a relaxed, family-friendly setting.
• NRPF is a Georgia limited liability company that serves as the holding company for the group. NRP FL and NRP FL 2 (collectively, the "Operating Debtors") are Delaware limited liability companies. NRPF is the sole member of NRP FL, which in turn is the sole member of NRP FL 2.

As of the Petition Date, the Debtors currently operate 53 restaurants and employed on a combined basis approximately 2,000 employees and independent contractors. The Debtors' combined EBITDA was negative during the past year, as inflationary pressure continued to increase operating expenses while simultaneously impacting the Debtors' core customer base, resulting in fewer restaurant visits and lower average tickets.

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Corporate History

NRP FL was formed to acquire 50 Applebee's restaurants in the Tampa and Orlando markets from a long-time franchisee of the brand. The initial acquisition was completed in May 2012. A subsequent acquisition of an additional 15 Applebee's restaurants by NRP FL 2 from another franchisee was completed in December 2012, with the additional locations spanning Florida, Georgia, and Alabama.

Growth Period

• The Debtors' business enjoyed a period of growth from 2013 through 2015, driven by both new restaurant development and organic expansion.
• During this period, the companies' combined EBITDA grew from $13 million to over $20 million in 2015.

Toward the end of 2015, however, sales began to soften, and the companies experienced periods of ups and downs as they battled through various unsuccessful strategies and promotions, the COVID-19 pandemic, and the inflationary pressures presently impacting the broader restaurant industry.

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Operations Overview

As of the Petition Date, the Debtors employed on a combined basis approximately 2,000 employees and independent contractors across their restaurant operations in Florida, Georgia, and Alabama.

Cash Management

• Prior to the commencement of the Chapter 11 cases, the Debtors maintained approximately 29 bank accounts with various depository institutions.
• The Debtors' primary cash management bank is Chase Bank ("Chase"), with additional accounts maintained at other financial institutions. The primary operating accounts with Chase collect payments from third-party payors.

Customer Programs

In the ordinary course of business, the Debtors offer and participate in certain customer programs, including prepaid gift cards, coupons, discounts, promotions, customer refunds, and other local incentive programs (collectively, the "Customer Programs"). These programs are designed to enhance customer satisfaction, develop and sustain customer relationships and loyalty, improve profitability, and ensure the Debtors remain competitive in the industry.

• The gift card program for all Applebee's franchises is administered by Stored Value Systems (the "Processor"), which tracks where every gift card is purchased and redeemed. The Processor makes weekly deposits into the Debtors' accounts for net receivables due to the Debtors for gift cards redeemed at their locations.
  • As of the Petition Date, the Debtors' net receivables were $283,770 in the aggregate.
• The Debtors, or Applebee's, from time to time issue coupons, discounts, and promotions redeemable for a certain dollar amount, percentage discount, or free meal, including through the Applebee's E-Club mailing list. As of the Petition Date, there were more than 306,521 customers enrolled as E-Club members.
• Customer refunds are issued via gift cards, and the Debtors' obligations related thereto are subsumed within the gift card program.
• The Debtors also run local promotional programs from time to time, including free meals for veterans on Veterans Day, lunch-punch cards, charitable donations, and locally generated coupons and discount cards.

Utility Relationships

• In the normal conduct of business, the Debtors have direct relationships with approximately 60 utility companies for the provision of electric, water, gas, telephone, internet, and other services. Prior to the Petition Date, the Debtors were current on all amounts owing to the utility companies.

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Prepetition Obligations

As of the Petition Date, the Debtors' prepetition capital structure includes the following obligations:

Equity Bank

• Approximately $13,184,000 is outstanding to Equity Bank ("Equity Bank") under various loan agreements, promissory notes, guaranties, and security agreements, all dated on or about November 19, 2020.
  • Equity Bank contends that its obligations are secured by a first priority lien on all of the Operating Debtors' assets, including real property, personal property, accounts receivable, and inventory.
  • However, prepetition UCC searches with the Delaware Secretary of State indicate that Equity Bank did not file any UCC-1 financing statements purporting to perfect its alleged security interests until February 17, 2026. The Debtors contend that these filings are avoidable as preferential transfers under Section 547 of the Bankruptcy Code, and that Equity Bank's liens are unperfected with regard to the Debtors' personal property, accounts receivable, and other intangible assets, rendering the Prepetition Equity Bank Obligations almost certainly treatable as general unsecured claims.

U.S. Foods

• Approximately $1,187,000 is outstanding to U.S. Foods, Inc. ("U.S. Foods") under various agreements, promissory notes, and security agreements.
  • U.S. Foods contends that its obligations are secured by a purchase money security interest in food inventory and other goods purchased by the Operating Debtors from U.S. Foods. U.S. Foods filed its original UCC-1 financing statement on February 22, 2013, which has been properly maintained.
  • The Debtors estimate the value of the U.S. Foods collateral at approximately $650,000 as of March 22, 2026. Additionally, the value of goods delivered to the Operating Debtors by U.S. Foods during the 20 days immediately prior to the Petition Date is at least $1,766,000.
  • Given that all or substantially all of the U.S. Foods obligations appear to be secured by an unavoidable first priority lien, are subject to administrative priority under Section 503(b)(9), and are likely partly protected by a statutory floating trust under the Perishable Agricultural Commodities Act, the Debtors have determined that the most prudent course is simply to pay the U.S. Foods obligations in full.

Employee Obligations

• The Debtors have incurred certain prepetition obligations related to their employees that remain unpaid as of the Petition Date. These obligations include: (i) wages, salaries, and other compensation; (ii) payroll taxes; (iii) qualified 401(k) plan obligations; (iv) health and welfare benefits; and (v) other benefits.

Sales and Use Taxes and Other Obligations

• The Debtors estimate that sales and use taxes collected but not paid to various state and local taxing authorities as of the Petition Date total approximately $610,806.
• Approximately $30,000 in gift card processor fees owed to Stored Value Systems was accrued and unpaid as of the Petition Date.

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Events Leading to Bankruptcy

Prolonged Operational Decline

Following a period of strong growth through 2015, the Debtors' performance deteriorated as sales softened and the companies battled through various unsuccessful strategies and promotions, the COVID-19 pandemic, and intensifying inflationary pressures across the restaurant industry. Inflationary pressure continued to increase the Debtors' operating expenses while simultaneously eroding the purchasing power of the Debtors' core customer base, resulting in fewer restaurant visits and lower average tickets.

• During fiscal year ending 2025, the Debtors were forced to close nine restaurants in an effort to stem losses. Despite certain stores remaining profitable, the Debtors' combined EBITDA was negative during the past year.
• Additional restaurants were closed during the first quarter of 2026, leaving the Debtors with 53 operating locations.

Failed Prepetition Marketing Process

In light of ongoing financial headwinds, the Debtors decided in early 2025 to seek one or more investors to purchase the restaurants and related assets, including the assumption of associated leases and franchise agreements. In March 2025, the Debtors retained Citizens Bank, a respected investment banking firm with substantial restaurant industry experience, to oversee the sale process.

• The process lasted approximately four to five months. Citizens Bank contacted over 83 groups, with 17 showing some form of initial interest, but was ultimately unable to identify any buyers willing to purchase the Debtors' assets and assume the associated leases and franchise agreements.
• Feedback indicated that a number of additional restaurants with uneconomical leases would need to be closed and/or significant concessions negotiated with landlords and the franchisor in order to attract more interest from potential purchasers.

Stalking Horse Agreement and Chapter 11 Filing

Despite the failed marketing effort, the Debtors continued to explore restructuring alternatives that would permit most, if not all, of their restaurants to remain open and preserve jobs. In February 2026, a tentative agreement in principle was reached with an affiliate of the Debtors' Applebee's franchisor ("Applebee's"), a subsidiary of Dine Brands Global, Inc., under which Applebee's would acquire approximately 53 of the restaurants and assume related leases and agreements.

• An effort was undertaken with Equity Bank to negotiate an arrangement that would have facilitated an out-of-court transaction. However, the parties were unable to finalize such an arrangement as of the Petition Date.
• Continuing financial pressures and resulting constraints on the Debtors' cash flow forced them to seek relief under Chapter 11 in order to consummate the transaction as a going-concern sale under Section 363 of the Bankruptcy Code.

On March 24, 2026, the Debtors each filed voluntary petitions for relief under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division.

• Applebee's has indicated that it will support the Debtors in this process, and it is expected that the parties will in the near future reach agreement on a stalking horse asset purchase agreement to serve as the basis of a sale process. The Debtors hope to complete the process and close on a sale by mid-May 2026.
• SC&H Group has been retained as the Debtors' investment banker to provide services in pursuit of the sale transaction, and GGG Partners, LLC has been engaged to provide interim management services, with Katie S. Goodman designated as Chief Restructuring Officer.