The owner of 27 Perkins restaurant franchises in Pennsylvania and Ohio continues to search for a buyer and has been granted more time to complete its federal bankruptcy filing.
“We’re continuing to pursue a sale of assets,” said Ryan Cooney, attorney for 5171 Campbells Land Co. LLC (CLC), following a pretrial hearing Wednesday in U.S. Bankruptcy Court for Western Pennsylvania.
CLC, which has 27 Perkins franchise locations, filed for Chapter 11 federal bankruptcy protection July 8 after Perkins’ corporate parent sued in federal court in Tennessee for more than $2.1 million for breach of contract.
“We’re still operating. We’re looking for one or more different operators to take over our locations,” Cooney said. “We’d like to preserve those locations and jobs.”
There are about 1,000 jobs in total at CLC’s restaurants.
Both CLC and its official unsecured creditors committee have petitioned bankruptcy court to oppose the formal appointment of a Chapter 11 trustee by the court.
In a filing with the court Tuesday, the unsecured creditors committee said that to preserve the value of CLC’s assets “it is critical” CLC have a prompt sale process.
Formal appointment of a Chapter 11 trustee “would significantly delay the sale process” and “may have the unintended effect of irreparably harming” CLC’s value, according to the unsecured creditors committee filing.
Bankruptcy court documents show CLC faces a potential cancellation of its fire and extended coverage insurance package on its locations, effective Oct. 4, 2019.
The cancellation notice from Argonaut Great Central Insurance Co. states the company failed “to comply with hourly premises inspections as recommended by Argo Insurance risk management services and failure to address premises hazards at your Clarion, PA restaurant during a 4/17/2019 safety survey.”
The cancellation won’t be effective until authorized by U.S. Bankruptcy Court.
In June, Perkins & Marie Callender’s LLC (PMC) of Memphis, Tenn., Perkins’ corporate parent, sued CLC for failing to pay more than $2.1 million in royalties, marketing contributions and transfer fees. PMC received a temporary restraining order from federal court in Tennessee to stop CLC from using the Perkins name on CLC’s restaurants.
A U.S. Bankruptcy Court stipulation and consent order between CLC and PMC went into effect Tuesday requiring 10 CLC restaurants to remove the Perkins name and all Perkins signs and identification.
Attorneys for Marc Group LLC of Pennsylvania, a company claiming it is the actual owner of CLC’s Perkins licensing agreements, didn’t file any objection with the court by Tuesday’s noon deadline and failed to show up at Wednesday’s hearing.
The 10 decommissioned Perkins franchises are Titusville, Erie’s west side, Warren, New Castle and Cranberry Township in Pennsylvania; and Ashtabula, Brooklyn, Canfield, Canton and Conneaut in Ohio.
Under the court order, CLC still may operate its other locations, including Vernon Township, Clarion, Corry, Erie’s east and south sides as well as Greenville, Grove City and Hermitage as Perkins and PMC may enter into new Perkins license agreements with other operators for any or all of CLC’s 27 locations.
Meanwhile, PMC, Perkins’ corporate parent, filed for Chapter 11 federal bankruptcy protection itself on Monday. In a news release issued Monday, PMC said it planned to sell its assets off as it restructures its debt.