Introduction
The bankruptcy case of six restaurant chains, Eat This Not That, has been making headlines recently as a new legal drama is brewing. The restaurant chains, which are owned by the same parent company, filed for Chapter 11 bankruptcy protection in April of this year. Since then, the case has been winding its way through the courts, with creditors and other parties filing claims and counterclaims. The case has become increasingly complex, with a number of legal issues at play. In this article, we will take a look at the legal issues involved in the case and what the outcome could mean for the restaurant chains.
New Legal Drama Is Brewing In the Bankruptcy Case of Six Restaurant Chains — Eat This Not That
The bankruptcy case of six restaurant chains is heating up as a new legal drama is brewing. The chains, which include Ruby Tuesday, Logan’s Roadhouse, Joe’s Crab Shack, and others, have been in bankruptcy since March 2020. Now, a group of creditors is accusing the chains’ parent company, RTI International, of mismanaging the bankruptcy process and attempting to strip them of their rights.
The creditors, which include hedge funds, private equity firms, and other investors, allege that RTI has been using the bankruptcy process to benefit itself at the expense of the creditors. They claim that RTI has been using the bankruptcy process to strip them of their rights to vote on the restructuring plan and to receive payments from the bankruptcy estate.
The creditors are now asking the court to appoint an independent examiner to investigate the allegations. They are also asking the court to appoint a trustee to oversee the bankruptcy process and ensure that the creditors’ rights are protected. The creditors are also seeking to have the bankruptcy case converted to a Chapter 11 reorganization.
The legal drama is just the latest development in the bankruptcy case of the six restaurant chains. The chains have been struggling since the pandemic began, and the bankruptcy process has been a long and complicated one. The creditors’ allegations could further complicate the process and delay the restructuring of the chains.
It remains to be seen how the court will respond to the creditors’ allegations. In the meantime, the restaurant chains are continuing to operate and serve customers. So, if you’re looking for a good meal, you can still eat at one of the six chains.
New legal drama could soon enshroud the bankruptcy case of Fresh Acquisitions, the parent company of six restaurant brands that once comprised a buffet chain empire.
According to Restaurant Business, creditors of the company have filed their own competing bankruptcy plan and claim that Fresh Acquisitions misappropriated funds leading up to the bankruptcy filing in April. They’re asking for a lawsuit that would recover the funds owed to them by Fresh Acquisitions.
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Fresh Acquisitions filed for bankruptcy in April, but its creditors are still owed $75 million, according to Restaurant Business. The former owner of Old Country Buffet, HomeTown Buffet, Ryan’s, and Furr’s is being accused of misappropriating as much as $20 million before the bankruptcy filing, including $4 million in Paycheck Protection Program funds, in an attempt to hide available funds from creditors.
“As the case unfolded, it became apparent that it was designed to be fait accompli to benefit the debtors’ owners with total disregard to the creditors holding the $75 million in debt [they] had amassed and planned to discharge,” a committee representing unsecured creditors said in its own competing bankruptcy filing.
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The company entered bankruptcy with the plan to sell itself to a company called VitaNova for $3.2 million, which would effectively pay off a debt Fresh Acquisitions had with them. However, a judge blocked this sale when the relationship between the two companies came into question—namely, the two had a history of pre-bankruptcy money transfers, the same office address, and the same chief financial officer.
After receiving $10 million in paycheck protection funds in 2020, Fresh Acquisitions transferred $4 million to a company affiliated with VitaNova, for which its creditors were not provided documentation, the new filing claims. Additionally, the filing states that Fresh has paid “management fees” to VitaNova’s affiliate that were disproportionately high compared to its revenues.
All in all, creditors believe there may have been as much as $20 million obfuscated from view by the time of the bankruptcy filing.
Due to the suspicions of malversation, the creditors of Fresh Acquisitions are asking the bankruptcy court to appoint a trustee who could in turn sue the company and recover the $20 million which could be distributed to them to cover the remaining debt.
As for the restaurant chains owned by Fresh Acquisitions, all six were recently purchased by BBQ Holdings, the parent company of Famous Dave’s. And while some hoped that would mean the comeback of shuttered brands like Old Country Buffet, the new owner dispelled speculations of their revival shortly after the purchase.
“[They were] just [intellectual property] that came alongside the transaction,” BBQ Holdings CEO Jeff Crivello said. “We have no immediate plans to reopen any of the buffet brands.”
Still, the company plans to continue operating the six locations of Tahoe Joe’s, the small chain of steakhouse restaurants that was part of the transaction.
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