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Judge OKs Rusty Pelican Reorganization Plan : Courts: Decision lifts the San Juan Capistrano-based upscale restaurant chain out of bankruptcy proceedings.

March 24, 1994|CHRIS WOODYARD | TIMES STAFF WRITER

SANTA ANA — A judge on Wednesday approved the reorganization plan of Rusty Pelican Restaurants Inc., officially lifting the upscale dinner house chain out of eight months of bankruptcy proceedings.

U.S. Bankruptcy Court Judge John E. Ryan found that the restaurant chain, which is based in San Juan Capistrano, had reached agreement on its debts and has a viable economic forecast for the next five years, lawyer Marc J. Winthrop said.

"The judge found their plan was feasible and (Rusty Pelican) is going back into the marketplace and surviving quite nicely," the Irvine bankruptcy lawyer said. "They are out of bankruptcy. Go eat at the Rusty Pelican!"

Rusty Pelican, once a high-flying chain that was the envy of the restaurant industry, filed for Chapter 11 bankruptcy reorganization last July. Company officials blamed excessive debt left over from a leveraged buyout and costly leases on less-popular restaurants.

Just before the filing, the company closed six of its 24 restaurants, including Rusty Pelicans in Irvine and Brea, and its Sand Dancer Broiler & Rotisserie in Newport Beach. It also sold two other restaurants, but the Rusty Pelican in Newport Beach remains.

Under the terms of the agreement, Rusty Pelican will pay 25% of the nearly $6 million owed to unsecured creditors. Its primary secured creditor, Heller Financial Inc. of Chicago, is providing a $1-million revolving line of credit. Heller is also lending $900,000, repayable in five years, according to Winthrop.

"The judge was very interested in reviewing the projects for the next five years and needed to be convinced the plan was feasible, that the company could survive," said Winthrop, who added he is "very pleased" at the outcome.

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