INDIANAPOLIS (Inside INdiana Business) — Indianapolis-based Steak ‘n Shake Inc. has avoided the possibility of filing for bankruptcy. Sources tell Bloomberg the restaurant chain has purchased and retired the balance of its $220 million loan, which was due in March, however it has also filed a lawsuit against an investment firm it says tried to force the company into bankruptcy.
In November, Texas-based Biglari Holdings (NYSE: BH), the parent of Steak ‘n Shake, said it may not be able to refinance the loan before the March deadline. The company hired advisors, including Washington D.C.-based FTI Consulting Inc. to help with its financial struggles.
Steak ‘n Shake last week filed the lawsuit against New York-based Fortress Investment Group LLC, alleging the firm misused confidential business information in an effort to acquire the restaurant chain.
The lawsuit says in the middle of last year, Fortress and Steak ‘n Shake were negotiating a deal for Fortress to potentially acquire more than a dozen restaurant properties. Steak ‘n Shake alleges Fortress, however, was using the deal to obtain financial information on the company.
Fortress ultimately purchased $89 million, or more than half, of Steak ‘n Shake’s outstanding debt. The lawsuit alleges Fortress “said it would either force the Company to repay the Loans in full or file for bankruptcy, in which case Fortress intended to ‘take the keys’ to the business.”
Steak ‘n Shake last week was able to pay $102 million to repurchase the loans held by Fortress, then on the same day filed the lawsuit in Marion Superior Court, seeking damages for Fortress’ efforts.
“This scheme has cost Steak ’n Shake millions of dollars and countless hours of management attention at a critical time,” the lawsuit says. “Fortress must be held to account for its breach, and for its bad faith conduct.”