Commitments And Contingencies

8 Months Ended

Sep. 08, 2015

Commitments And Contingencies [Abstract]

8.	COMMITMENTS AND CONTINGENCIES

The Company is subject to various claims, possible legal actions, and other matters arising out of the normal course of business. While it is not possible to predict the outcome of these issues, management is of the opinion that adequate provision for potential losses has been made in the accompanying condensed consolidated financial statements and that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Prior to the acquisition of Lone Star Steakhouse & Saloon, Inc. by Lone Star Fund, the Company’s predecessor guaranteed certain lease payments of certain non-Company restaurants in connection with the leasing of real estate for restaurant locations. As of September 8, 2015 and December 30, 2014, the Company was responsible as guarantor for five of these leases of its former affiliate. The leases expire at various times through 2016. These guarantees will require payment by the Company only in an event of default by the former affiliate where it is unable or unwilling to make the required lease payments.

During fiscal 2015, the Company received notification that its former affiliate ceased payments on two of the five aforementioned leases. The two leases, for which payment had not been made, are non-operating land leases, while the other three leases guaranteed by the Company are operating properties. The lessor of these two non-operating land leases obtained a court judgement against the Company’s former affiliate and as a settlement, the Company agreed to pay half of the judgement, which was approximately $210 thousand. Accordingly, $210 thousand was recorded to Other expense during the first 36 weeks of fiscal 2015.

Management believes that the likelihood is remote that material payments will be required under the remaining three guarantees. At September 8, 2015 and December 30, 2014 the maximum potential amount of future lease payments the Company could be required to make as a result of the guarantees was approximately $0.5 million and $0.9 million, respectively.

At September 8, 2015 and December 30, 2014, the Company had outstanding letters of credit of $1,423,250 and $1,076,000, respectively, of which $1,404,250 and $861,000, respectively, were drawn on the Company’s credit facility (see Note 4, Long-Term Debt) and $19,000 and $215,000, respectively, were collateralized by restricted cash. The letters of credit typically act as guarantee of payment to certain third parties in accordance with specified terms and conditions.