BLT Steak Parent Files Bankruptcy | FSR magazine

The company didn't qualify for full forgiveness under the Paycheck Protection Program and failed to receive monies from the Restaurant Revitalization Fund.

BLT Restaurant Group, parent of BLT Steak and BLT Prime, declared bankruptcy, in part because of issues with the Paycheck Protection Program (PPP). 

In the U.S., the company owns four locations (three BLT Steaks and one BLT Prime) and provides management services for an additional four stores (one BLT Steak, two BLT Primes, and Italian concept The Florentine). 

When COVID struck, BLT Restaurant Group closed its doors for the first time in its 16-year history. The company accessed a PPP loan worth $3.29 million in April 2020, with the intention of continuing operations and paying employees.

However, BLT Restaurant Group was unable to operate at normal capacity for any of the 24-week forgiveness period. For 91 percent of that stretch, restaurants couldn’t offer indoor dining, and for the remaining 9 percent, locations were restricted to an unprofitable 25 percent indoor capacity. 

Due to capacity limitations, the company couldn't maintain the workforce necessary for full forgiveness under the PPP’s requirements. As a result, BLT Restaurant Group is required to repay $1.3 million of the loan. 

All PPP funds were spent on allowable expenses, including 60 percent on payroll, in accordance with guidelines. For all of 2020, the company suffered a loss of $7.6 million before offsetting expenses covered by the loan. 

“The company applied for and received PPP funds at the earliest opportunity because it was not known how much would be available or for how long,” court documents state. “At the time the funds were applied for, no one knew the economic disruption would last so long, and had that been known, the company would have delays applying for the funds until a later date so all funds could be expended during the covered period.”

BLT Restaurant Group’s PPP woes didn’t end there. The company filed for its initial loan on a consolidated basis because that’s what was allowed at the time. Because the brand did it that way the first time around, the Small Business Administration (SBA) required that it had to be done the second time, as well. 

Consolidated loans for the second round of PPP were capped at $2 million. If BLT had been able to apply on an individual restaurant basis, it would have received $3.4 million, court documents state. 

“This treatment was not mandated by the enabling legislation,” the filing states. “It was an arbitrary decision by the SBA that unfairly penalized companies filing the first loan on a consolidated basis in accordance with the guidance in effect at the time the filing was made.”

BLT Restaurant Group was also left out of the $28.6 billion Restaurant Revitalization Fund (RRF) despite applying within five hours of it opening and being eligible for $7.1 million. 

The SBA notified the company that it submitted bank statements incorrectly, so it resubmitted new documentation within two hours of the comments. Looking back, BLT Restaurant Group believes this resubmission caused it to lose its place in line and miss out on funds. 

About 177,000 restaurants applied for and did not receive an RRF grant. In early March, it was revealed that Congress was walking away from replenishing the fund. 

“The company continued its operations at a loss until [March 18] based on a hope that bills introduced in Congress would allow the Debtor to extend the covered period for its first loan and/or grant additional funding for the Restaurant Revitalization Fund,” the filing states. “With the passage of the recent budget bill, those hopes are no longer reasonable and Debtor has no other option than to file for bankruptcy.”

In addition to its unpaid PPP loan, the company owes $7.8 million to majority owner JL Holdings 2002. The entity also provided BLT Restaurant Group with up to $600,000 in debtor-in-possession financing to preserve open units and give BLT Restaurant Group time to restructure debt, including paying off the PPP loan over two years. 

Prior to bankruptcy, the company permanently shuttered BLT Burger in Washington, D.C., BLT Steak in White Plains, New York, American grille concept The Wayfarer, and Italian restaurant Casa Nonna.