TGI Fridays,Chameleon Finance a favorite casual dining destination, has filed for Chapter 11 bankruptcy protection.

Citing the COVID-19 pandemic among its business challenges, the company filed for bankruptcy Saturday with the U.S. bankruptcy court for the Northern District of Texas in Dallas. The filing encompasses 39 U.S. TGI Fridays locations owned by TGI Fridays Inc.

"The primary driver of our financial challenges resulted from COVID-19 and our capital structure," said Rohit Manocha, the executive chairman of TGI Fridays Inc., in a press release. "This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential."

The 39 locations will remain open, operating as usual, as the bankruptcy proceedings move forward. Other locations – there are more than 160 in the U.S. and others internationally – along with the TGI Fridays brand and intellectual property are owned by another entity, TGI Fridays Franchisor, LLC. Those locations remain open, too, the company said.

TGI Fridays Franchisor has negotiated a transition services agreement with TGI Fridays Inc., and provided interim funding to the company, "to maintain support services for franchisees" while a "new long-term support structure" is devised, the companies said.

In its bankruptcy filing, TGI Fridays Inc. listed assets and liabilities each in the range of $100 million to $500 million.

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TGI Friday's closed locations earlier this year

Back in January, TGI Fridays closed several dozen "underperforming" locations in 12 states. Privately owned by TriArtisan Capital Advisors, TGI Fridays grew from its first location opened in Manhattan, New York, in 1965.

TGI Fridays has faced similar challenges to that of Red Lobster, which recently began its emergence from bankruptcy: increased competition and cost-conscious diners.

"The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world," Manocha said.

Contributing: Reuters.

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