Monthly Archives: April 2021

Photograph: Shutterstock

Fresh Acquisitions LLC and Buffets LLC declared Chapter 11 bankruptcy on Tuesday, more than a year into a pandemic that proved especially difficult for its six restaurant chains, five of which specialize in buffet-style service.

Yet it is also the fifth time the companys various chains have sought federal debt protection since 2008, thanks to heavy debt loads, cost-cutting and a consumer that has shifted away from all-you-can-eat concepts.

The company, owned by the now-defunct FMP Management, has closed the vast majority of its restaurants. Fresh and Buffets entered the pandemic with 90 restaurants under the Tahoe Joes, Old Country Buffet, HomeTown Buffet, Ryans, Fire Mountain and Furrs brands.

It has closed all but six of the Tahoe Joes steakhouse locations.

FMP Management, which acquired all the brands in an aggressive bid for low-priced restaurant chains in 2014 and 2015, ceased operations in June and is also in bankruptcy.

In January, a San Antonio-based restaurant operator VitaNova Brands began providing management services to the buffet concepts. VitaNova has provided the company with financing to get it through the bankruptcy process.

Fresh Acquisitions plans to run a sale process that will include selling Furrs intellectual property, according to court documents, which provides flexibility to the buyer and allows the brand to be reopened in the future, if desired.

In a statement on Tuesday, VitaNova CEO Jason Kemp said the focus will be on Tahoe Joes and Furrs AYCE Marketplace, a redesigned version of the brand that was revealed back in August. We are looking forward to emerging from bankruptcy as a stronger operator with a focus on the Tahoe Joes and Furrs AYCE Marketplace banners, Kemp said. These great brands serving great food will create a platform for future growth.

Its uncertain exactly how many locations will reemerge in a post-bankruptcy environment, or even whether any of the other four brands in their entirety will emerge at all.

According to court documents, FMP management has $13.5 million in debt.

The pandemic, however, has been particularly tough on the companys liquidity position. The six Tahoe Joes together generated just $21 million per year in revenue before the pandemic.

The precipitous decline in sales at the restaurants resulting from occupancy restrictions and the banning of family-style buffet dining forced the companies to take extraordinary steps, including the closing of multiple locations, Kemp said.

Still, its been a brutal 13 years for those buffet brands, which trace their history to the formation of Buffets Inc., in 1983. In 2006, that company merged with Ryans to create a 650-unit buffet behemoth just two years before the recession hammered much of the industry. The company declared bankruptcy in 2008.

It did so again in 2012. It was sold to FMP in 2015 and then declared bankruptcy one year later.

Furrs, meanwhile, filed for bankruptcy in 2014 and was then sold to FMP in 2015.

Along the way the various brands closed stores aggressively. What is now known as Buffets LLC had 300 locations when FMP acquired the company in 2015.

The pandemic has indeed been brutal on buffet brands. The owner of Souplantation and Sweet Tomatoes opted to liquidate back in May, for instance, while the two largest franchisees in the Golden Corral system have also sought debt protection after the pandemic made it difficult to offer buffet dining. The largest of those franchisees is hopeful that sales will rebound strongly coming out of quarantine.

Read the rest here:

The parent of Old Country Buffet and Furrs declares bankruptcy - Restaurant Business Online

Even though filing for bankruptcy is a legal tool that can be used by any individual or business including a former U.S president there is a negative social stigma around it, according to John Oliver.

The HBO host devoted the latest episode of Last Week Tonight to examining why modern-day bankruptcy has become a boon for credit card companies and other intermediaries while hurting individuals trying to get a fresh start.

Oliver called out media personalities like Shark Tank host Kevin OLeary and former CNBC host/personal finance expert Suze Orman for demonizing bankruptcy filings on their shows.

Bankruptcy is not solely caused by bad decisions, its often caused by bad luck, Oliver said. Unavoidable challenges like job loss, divorce, surprise medical bills, or perhaps even, you know, a once-in-a-century global pandemic.

Oliver then delved into the history of bankruptcy law in the United States, focusing on notable changes to the law in 1978 and 2005.

Our modern bankruptcy code was enacted in 1978 interestingly, around the same time that the credit card industry began to enjoy a period of steady deregulation, Oliver said. That worked out very well for them, because they marketed themselves aggressively, and during this time, consumer debt began to sharply rise. And what the industry clearly wanted was people stuck in a lucrative cycle of minimum payments, late fees, and interest hikes. What they didnt want spoiling that was people cutting the cycle short through bankruptcy.

In 2005, meanwhile, lobbyists for credit card companies pushed Congress to pass the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it more difficult for individuals to file for bankruptcy. It also led to a rise in lawyers pushing clients away from the less-expensive Chapter 7 bankruptcy and instead filing for the more costly Chapter 13 bankruptcy.

In archival footage, Oliver showed Elizabeth Warren, then a Harvard professor studying bankruptcy, testifying before Congress about how medical debt ruins peoples lives. In the clip, she receives pushback from then-U.S. Sen. Joe Biden, who, as Oliver explained, was one of the bills biggest backers.

Joe Biden is from Delaware, home to some of the biggest credit card companies, and his support was crucial to getting the 2005 law passed, Oliver said.

In the clip, Biden kept shifting focus from individuals who were ruined by medical debt back to the poor creditors who wouldnt get their money, as Oliver put it.

Oliver ended the segment by noting that while Biden has broadly supported Warrens proposed Consumer Bankruptcy Reform Act, it is unlikely to pass, with zero Republicans supporting it.

The fact is, something big needs to happen here, Oliver said. Because we badly need to get our broken bankruptcy system working again for people who desperately need a lifeline.

Enable breaking news notifications straight to your internet browser.

Great, youre signed up!

The rest is here:

John Oliver explains the problems with Americas broken bankruptcy system - Boston.com

19 April 2021 | Alan Burkitt-Gray

Frontier Communications has passed the last hurdle in emerging from last years bankruptcy, after the support of Californian authorities.

The company, which went into chapter 11 bankruptcy protection on 14 April 2020, said the California Public Utilities Commission had unanimously voted to approve its emergence.

The Federal Communications Commission (FCC) approved the plan in January.

Having already received all other required state and federal approvals, the company expects to successfully emerge from chapter 11 in the coming weeks, said Frontier, which will start its new life with a refreshed management team.

Former Vodafone UK CEO Nick Jeffery (pictured) became CEO on 1 March, following the announcement of his appointment in December.

Under the deal to come out of bankruptcy, bondholders with more than $11 billion worth of outstanding unsecured bonds agreed a restructuring support agreement. That will reduce debt by more than $10 billion and cut $1 billion off annual interest payments.

As part of its post-bankruptcy reconstruction, last week the Frontier hired Veronica Bloodworth from AT&T to be executive VP and chief network officer. She will report directly to Jeffery and oversee all of Frontiers network operations, including those related to its modernisation plan.

Bloodwort was senior VP of construction and engineering for AT&T, leading the planning, design, construction and capital maintenance of the wireline and wireless network infrastructure across a national footprint.

Steve Gable, who was CTO, will take on the new role of chief digital and information officer, leading Frontiers digital transformation.

Jeffery said about Bloodworth: With her wireline and wireless network management expertise, she will strengthen our team and improve our performance across the company.

The rest is here:

Frontier to emerge from bankruptcy with new team in place - Capacity Media

Knotel CEO Amol Sarva

Amol Sarva lost control of Knotel, the flexible workplace company once valued at more than $1B last year, and he is laying the blame at his own feet, he said last week, because he regrets his dealings with the chairman of Newmark and Cantor Fitzgerald.

Knotel in February saidit would be taken over by Newmark, with the real estate firm providing $20M in debtor-in-possession financing to allow Knotel to keep running through the bankruptcy proceedings.

In a video with the YouTube web series The Business of Business, postedlast week, Sarva details the circumstances that led up to the startups collapse, with nepotism and the dog-eat-dog nature of the business listed as primary causes. Ultimately, he said the company is in someone elses hands, because of his own bad decision to accept Newmark funds and let these guys into the company.

He also saidif he had managed the relationship with Newmark better, he may have still been playing a key role in running the firm today.

In 2019, Knotel reachedunicorn status after closing a $400M funding round, with Newmark as one of the returning investors. Sarvasaid on the video that Newmark CEO Barry Gosin approached Knotel operators, saying Newmark wanted to put the companybehind Knotel, saying well help you.

Newmark then introducedthe company to investment bank Cantor Fitzgerald, per Sarva. Cantor Fitzgerald's founder and chairman is Howard Lutnick, also the chairman of Newmark. Upon the urging of Newmark, Sarva said, Cantor Fitzgerald became the startups bank.

"It was one of my regrets to do this nepotistic thing, Sarva said.

On Dec. 30 last year, Sarva said he was contacted by Knotel'sventure lender, the bank TriplePoint Capital, which said it had sold the debt, even though a refinancing plan was in the mix.

Soon after, Sarva said hewas contacted by Lutnick though he does not name him but refers to him as this guy who is the chairman of Newmark and the managing partner of Cantor Fitzgerald. Over the period of a few days, Sarvalearned that Newmark had bought Knotel's debt, he said.

Lutnick called again a few days later, Sarva claims, saying he now owned all the debt." Sarva said that the company was told it was in default in various ways and was about to be foreclosed on.

[They said] youre going to have to shut down your whole business, or we can lend you another $20M now on the condition that you bankrupt the company, run an auction for it and let us buy it, Sarva said. It was just like, consummate Wall Street.

Earlier this month,Sarva sent an emailcastigating Newmark for installing a group of Adam Neuman[n]-era WeWork bros to lead the company forward."

Newmark tapped former WeWork Vice Chairman Michael Gross to guideKnotel through the process.

Sarvasaid in the video he regrets not doing diligence on Lutnick.

What a cluster, it was a disaster, he said, adding the whole process negatively affected investors, employees and customers. Arguably, its all in their rights, and it's capitalism and it's a dog-eat-dog world but you can choose how you want tobehave in life."

The real estate business is full of all these shady people, and they are very outspoken about each other,Sarva added, acknowledging that he should have done greater research before taking on Newmark's financial injection.

At the time of bankruptcy, Knotel listedboth estimated liabilities and assets between $1B and $10B. Gosin said Newmark was providing capital to rightsize its business."

At the startof the coronavirus pandemic, Knotel laid off and furloughed employees around the world, with Sarva saying business as usual was over. Knotel was soon accused of skippingon rent payments and sued by several landlords who claimed they were owed money.

Originally posted here:

Ousted Knotel CEO Says 'Nepotistic' Deal With Newmark Led To 'Disaster' Bankruptcy - Bisnow

DOVER, Del. (AP) Insurance company The Hartford has agreed to pay $650 million into a proposed trust fund for victims of child sexual abuse as part of the Boy Scouts of America bankruptcy case.

In exchange for the payment, the Boy Scouts and its local councils would release The Hartford from any obligation under policies it issued to the BSA and the councils dating back to 1971.

The settlement agreement and release was submitted to the court on Friday by a panel of mediators that is working with the BSA, abuse victims and other parties in the bankruptcy to try to fashion a global resolution of more than 80,000 sexual abuse claims.

Our agreement with The Hartford is an encouraging step towards achieving a global resolution that will promote the BSAs efforts to equitably compensate survivors and continue the mission of Scouting, the organization said in a statement. We are committed to continuing our mediation efforts with all parties and look forward to sharing additional updates as these discussions progress.

According to the court filing, The Hartfords payment will be reduced if, after the agreement is signed, the BSA or the settlement trust enters into an agreement with another insurer, Century Indemnity Company, and Centurys settlement amount is less than two times The Hartfords settlement amount.

Even without the possible reduction in The Hartfords payment, attorneys representing abuse victims in the bankruptcy were appalled by the settlement.

Its outrageous. Their real liability is in the billions of dollars, said Paul Mones, who represents hundreds of abuse victims, including members of the official tort claimants committee that is charged with acting as a fiduciary for abuse victims in the bankruptcy.

This is just business as usual for the Boy Scouts paying lip service to their supposed understanding and concern for their horrific legacy of sex abuse but not doing anything substantive, Mones added.

Jim Stang, an attorney for the tort claimants committee, or TCC, said there are at least 24,000 sexual abuse claims subject to The Hartfords policies. The actual number is likely significantly higher, given that many victims did not include the dates they were abused on their claim forms, he noted.

We think their exposure is $8 billion for the 24,000 claims, Stang said, adding the committee will be objecting to the settlement. Theyre not even paying 10% of what we think theyre on the hook for.

The agreement with The Hartford was announced after the Boy Scouts filed a revised reorganization plan earlier this week after gaining little support for a previous proposal.

The previous plan called for a $300 million contribution by local councils to the settlement trust, about $115 million in cash and noninsurance assets from the BSA, and the assignment of BSA and local council insurance policies. In return, the BSA, its 253 local councils and hundreds of sponsoring organizations such as churches and civic groups would be released from further liability. Any insurance companies that agree to pay specific settlement amounts into the trust also would be shielded from further liability.

The new plan increases the contribution from local councils to $425 million but keeps the national organizations contribution at $115 million. More than half that amount consists of the estimated value of the BSAs art collection, including several Norman Rockwell paintings.

Should abuse victims not approve the new plan, the BSA which says it needs to exit bankruptcy by late summer would turn to an alternative BSA-only plan. Under that plan, the settlement trust would be funded only by the BSA, and only for claims made against the national organization, not local councils. The councils and local sponsoring organizations such as churches and civic groups would make no contribution to the settlement trust and would have no protection from liability for abuse claims.

Depending on which plan is used, the BSA estimates the amount of money to be available for abuse victims at between $2.4 billion and $7.1 billion, including insurance rights.

The official tort claimants committee estimates the value of some 84,000 sexual abuse claims at about $103 billion.

The Boy Scouts of America, based in Irving, Texas, sought bankruptcy protection in February 2020 in an effort to halt hundreds of lawsuits and create a compensation fund for men who were molested as youngsters decades ago by scoutmasters or other leaders.

Attorneys for abuse victims have said from the start that they would go after properties and assets owned by local councils to contribute to a settlement fund. The local councils, which run day-to-day operations for local troops, are not debtors in the bankruptcy and are considered legally separate entities by the Boy Scouts, even though they share insurance policies and are considered related parties in the bankruptcy.

Get the latest insurance newssent straight to your inbox.

Go here to read the rest:

The Hartford Agrees to Pay $650 Million in Boy Scouts Bankruptcy - Claims Journal