Saladworks Seeks Chapter 11 Bankruptcy Protections
Saladworks LLC has filed for Chapter 11 bankruptcy protection. The company is looking for a buyer that will be able to extricate the company from an on-going legal issue involving its current owners.
Operations Continuing During Chapter 11 Bankruptcy
Based in suburban Philadelphia, Saladworks offers salads, sandwiches, wraps, soups, and other food items. Additionally it owns intellectual property such as trademark and collects royalties and fees from the stores’ operations.
Additionally, the fresh-salad franchiser said none of roughly 100 Saladworks locations or affiliates are involved in the Chapter 11 bankruptcy. These locations will also continue to operate normally as the the franchiser works through its legal problems. The company believes it will be able to put together a deal that will satisfy its debts.
Litigation Leads to Stalemate
Litigation in Delaware and Pennsylvania between majority owner John M. Scardapane and 30% stakeholder Vernon W. Hill II has stale-mated the sell of additional franchises.
Mr. Hill is a co-founder of Metro Bank in the U.K. and former chief of Commerce Bancorp in New Jersey. He has pushed for Mr. Scardapane to buy him out since 2013.
According to the bankruptcy court documents, Mr. Hill is alleged that he is owed $8.8 million. The company is disputing those claims. Saladworks has listed a debt of roughly $2.5 million that is owed to a company that Saladworks believes to be associated with Mr. Hill. That $2.5 million amount is also disputed.
According to court papers, Saladworks sought bankruptcy protection in Delaware in an attempt to quiet litigation in Delaware and Pennsylvania in hopes it can pursue a sale or recapitalization of the business.
Saladworks President Paul Steck said the bankruptcy protection will allow the company to “focus on its restructuring free from the value-destructive, distracting litigation in Pennsylvania and Delaware.”
Source: The Wall Street Journal, Saladworks Files for Chapter 11 Bankruptcy Protection, February 17, 2015