An emergency hearing is set for Monday on a temporary agreement to see if the company that franchises 27 regional Perkins restaurants will continue operating some of its restaurants as Perkins restaurants.
The hearing in U.S. Bankruptcy Court in Pittsburgh is set to get court approval for an agreement between 5171 Campbells Land Co. (CLC) of Rankin, Pa., which operates 27 Perkins franchises, and Perkins & Marie Callender’s LLC (PMC) of Memphis, Tenn., Perkins’ corporate parent.
The hearing is being held in bankruptcy court as CLC filed for Chapter 11 federal bankruptcy protection on Monday to reorganize its debts.
Federal Chapter 11 bankruptcy rules prohibit legal actions by, for or against a corporation unless approved by a federal bankruptcy judge.
Under the proposed agreement, CLC will close 10 of its 27 franchised restaurants while PMC works to find other operators for any or all of the restaurants. CLC operates the franchised restaurants in western Pennsylvania, northeastern Ohio and southwestern New York.
If the proposed plan is approved by the court, Perkins restaurants would remain open in Hempfield Township, Hermitage and Grove City as well as in Vernon Township near Meadville, on Erie’s east and south sides, and in Clarion and Corry.
Perkins locations that CLC would close if the agreement is approved are in Titusville, on Erie’s west side, Warren, New Castle and Cranberry Township in Pennsylvania; and Ashtabula, Brooklyn, Canfield, Canton and Conneaut in Ohio. CLC may reopen those locations under a different name as long as they aren’t similar to Perkins, according to the proposed agreement.
In June, PMC filed a four-count breach of contract suit against CLC for failing to pay $2,164,504.29 in royalties, marketing contributions and transfer fees with U.S. District Court for the Western District of Tennessee.
On June 28, PMC got a temporary restraining order from federal court in Tennessee to stop CLC from using the Perkins name on CLC’s restaurants.
At a hearing July 8, U.S. District Court for the Western District of Tennessee subsequently ruled the restraining order extended through Aug. 5, according to court records.
CLC was ordered to stop using Perkins’ trademark and “any and all signs, flags, menus, fixtures, furniture, furnishings, equipment, advertising, materials, stationery, supplies, forms or other articles that display or contain any PMC trademark.”
CLC filed for Chapter 11 bankruptcy protection to reorganize its debts on July 8 — the same day as the hearing on the restraining order.
According to CLC’s bankruptcy filing, the company’s assets are between $1 million and $10 million, but its estimated liabilities are between $10 million and $50 million.
Among the creditors with the biggest unsecured claims are PMC, $1.5 million; Pennsylvania Department of Revenue, $1,335,489; U.S. Foods, $1 million; Ohio Department of Taxation, $835,786; Reinhart Food Service, $435,361.29; and Internal Revenue Service, $350,000.
CLC bought the 27 Perkins restaurants in U.S. Bankruptcy Court in Erie in January 2018 with plans to make $12 million in upgrades to the restaurants within two years.
CLC bought the restaurants from Meadville-based Unique Ventures Group LLC, the previous operator, for $7.8 million. Unique Ventures filed for Chapter 11 bankruptcy protection in February 2017 to reorganize its debts.