Hooters is reportedly preparing for a Chapter 11 bankruptcy filing amid falling traffic and mounting debts.

The chain is working with law firm Ropes & Gray to prepare for the filing, Bloomberg has reported, adding that the process is expected to begin within the next two months.

The company has not issued a statement about its plans but is believed to be working with creditors to develop a plan to restructure its business.

It is also reportedly in talks with turnaround consultants from Accordion Partners to deal with the ongoing financial challenges.

According to Bloomberg, Hooters has been facing financial struggles due to a significant decrease in customer traffic to its restaurants. The chain has had to shut down its stores over the past years.

The company is also in heavy debt. It borrowed $300 million in asset-backed bonds in 2021, the report added. 

This form of structured debt, known as whole-business securitization, is popular among restaurant chains, fitness centers and other franchise-heavy enterprises.