Florida Based Restaurant Chain Files for Chapter 11 Bankruptcy Amid Lender Dispute

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Florida-based restaurant chain Hawkers Asian Street Food, which has gained recognition from the Michelin Guide, has filed for Chapter 11 bankruptcy protection as it battles to retain control of its business. The company, which operates a location on Atlantic Avenue in Delray Beach, made the filing on September 16 in the U.S. Bankruptcy Court for the Middle District of Florida.

The decision to seek bankruptcy protection came after Hawkers received a default notice from its lender, ABC Funding LLC, a representative for Boston-based Summit Partners Subordinated Debt Fund IV-A LP. The restaurant chain, known for its vibrant take on Asian street food, turned to Scott Shuker, a business bankruptcy attorney with Orlando firm Shuker & Dorris PA, to help navigate the situation.

Battle to Retain Ownership

Despite making all required payments, Hawkers found itself at risk of losing control of its business due to loan terms that allowed the lender to take ownership under specific conditions. Shuker explained that the default occurred because of a clause tied to the company's debt-to-net worth ratio. When this ratio hit a certain threshold, Summit Partners could move to seize control of the business.

"Hawkers has not missed a payment," Shuker emphasized. "It became clear that the lender was seeking to divest them of their ownership." The issue at hand is not focused on selling the business, as was the case with Red Lobster in a separate bankruptcy, but on preventing Summit from taking over, Shuker added.

Summit Partners' Exit from Lending

The lender, Summit Partners, appears to be moving out of the lending business, according to Shuker. The firm is seeking to reclaim as much as possible from its $20 million loan to Hawkers and potentially pass the business on to another buyer.

“We got word that Summit wants to get out of the lending business,” Shuker said. “I think they wanted to take control until they could find somebody to take Hawkers over and get as much as they can on their loan.”

Executives from Summit Partners were not available for comment on the matter.

Chapter 11 Filing to Protect Operations

By filing for Chapter 11 bankruptcy, Hawkers aims to protect its ownership and stave off a takeover by the lender. The bankruptcy process will allow the company time to renegotiate the loan terms and resolve its financial issues while maintaining its current operations.

According to Shuker, none of Hawkers’ 15 locations across Florida, Georgia, North Carolina, Tennessee, Maryland, Virginia, and Texas are expected to close during the bankruptcy process. The company remains committed to its day-to-day operations and plans to continue serving its signature Asian street food to loyal customers.

Continued Growth Amid Challenges

Hawkers Asian Street Food, which began as a small eatery inspired by the bustling street markets of Asia, has grown into a well-known brand in the southern United States. The chain's inclusion in the Michelin Guide highlights its culinary success, while its eclectic menu and energetic atmosphere have won over diners in multiple states.

Despite the current financial challenges, Hawkers’ filing for Chapter 11 is not a sign of the company’s decline but rather a strategic move to maintain control and secure its future. By addressing the financial pressures imposed by its lender, Hawkers aims to stabilize its operations and continue expanding in the highly competitive restaurant industry.

For now, the company and its legal team remain focused on renegotiating terms with Summit Partners and protecting the brand that has become a favorite among food enthusiasts across the Southeast.