In a Chapter 7 filing, a company seeks to liquidate its assets and shut down.
Locations owned by franchisees were not part of the bankruptcy filing and will not be shut down, said Larry Briski, president of the Bennigan's Franchise Operator Association.
"They will be open today, tomorrow and months and years to come," Briski said of the franchise locations.
He said there are about 160 domestic and international franchise locations and about 150 company-owned Bennigan's restaurants.
Meanwhile, employees at what appeared to be a company-owned Bennigan's in Plano were greeted by a sign Tuesday on the front door reading "WE ARE CLOSED. THANK YOU." Next door, a Steak & Ale sat empty in a deserted parking lot but there was no sign posted.
A waiter named Steve, who wouldn't give his last name, said the staff got a phone call Tuesday morning telling them the restaurant was closing.
Neither Bennigan's nor the Metromedia Restaurant Group returned calls for comment. A lawyer listed in the filing, J. Michael Sutherland of Carrington, Coleman, Sloman & Blumenthal LLP, did not return a call.
The filing lists 38 separate entities that it classified as "debtors" but does not include a list of locations that are shutting down.
All restaurants have been struggling as consumers cut back on discretionary spending to better deal with high gas prices, the weak housing market and inflation. The hardest hit have been casual dining chains and bar and grill restaurants, which charge higher prices than fast food and other quick-service chains.
Bar and grill restaurants have also suffered from intense competition. Morningstar analyst John Owens said several chains expanded quickly, making it more difficult for customers to differentiate between them and forcing many companies to cut prices to lure diners.
"Bennigan's was the weakest of the major players," Owens said.
Meanwhile, commodity costs have soared, forcing chains to either raise menu prices or see profits plunge.
Credit has also been tight, making it difficult for companies to restructure their debt.
In June, Metromedia Restaurants said it was formulating a proposal to present to its lenders to restructure its debt, but said it was not preparing to file for bankruptcy.
In the filing, the company indicated that it has up to 49 creditors and owes less than $50,000. It said it will have no funds left after administrative expenses are paid to repay its creditors.
Jeffry Davis, a bankruptcy attorney at Mintz Levin in San Diego who is not involved in the filing, said he was surprised the company didn't file for Chapter 11 protection, which would have allowed it to reorganize and remain open, and instead filed to liquidate its assets.
"Typically, at that point, management sees no way to improve the business within a reasonable period of time to allow it to go forward," he said. "To me it's really indicative of the economy."
The news appeared to be a shock to most of the company's employees, but some may have had an inkling that the company was not doing well.
Steve, the Bennigan's waiter in Plano, said he recently went from making $30 on a good lunch shift to only $10.
"Business has been slow," said Steve, who said he relies on tips. "I went from making a lot of money on a shift to making very little.
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