Garces Restaurant Group Inc. filed for Chapter 11 bankruptcy protection in New Jersey on Wednesday, and also reportedly agreed to sell some assets to Covington, La.-based Ballard Brands LLC for $5 million.
Chef and founder Jose Garces said earlier in the week that bankruptcy was a consideration as he battles multiple lawsuits from suppliers and investors, some of whom made an attempt this week to oust him from managerial control of three Philadelphia restaurants.
The Philadelphia-based company said in a statement that the sale will stabilize its finances and allow for business as usual during a “short” reorganization process.
“With today’s filing, we are able to chart a new course for our future by stabilizing our financials while we continue our commitment to provide high-quality culinary and hospitality to our guests,” Garces said. “The last couple of years have been challenging, there is no doubt. This step allows us to build on our solid reputation and performance to bring new concepts to life with a fresh start.”
As part of the filing, Ballard has offered to purchase some, but not all of the restaurants, for $5 million in cash and assumed liabilities — although it’s not clear which concepts the acquisition would include. The group’s 13 concepts in Pennsylvania, New York and New Jersey include Distrito, Ortzi, Bueno Onda, The Olde Bar and Volver.
In hearings Thursday, the judge agreed to hear arguments in coming weeks filed by investors seeking control of the restaurants Amada, Whiskey Village and Tinto. In the lawsuit earlier this week, investors contended those restaurants were not part of the larger group enterprise.
Officials with Garces Group, however, described those investors as holding a minority stake, saying the Garces Group has the authority to maintain managerial control.
Ballard Brands, formed by brothers Paul, Scott and Steve Ballard, is parent to several brands, including Wow Café, PJ’s Coffee of New Orleans, The Original City Diner, Boardhouse Serious Sandwiches, Richard Fiske and Ole Saint, including nearly 153 restaurants in 28 states and three countries.
Following the sale, which is expected to close in 45 to 60 days, Garces said he will continue to be the creative force behind the restaurants, as well as Garces Catering and the company’s managed services business.
“Anytime you have an opportunity to work with a chef of Jose’s caliber, you jump at it,” said Scott Ballard, Ballard Brands principal, in a statement. “We couldn’t be more excited to combine our organizations and leverage chef’s skill to expand our operations beyond the Southeast and Mid-Atlantic markets our two groups currently serve.”
Garces Group blamed the company’s financial difficulties on the sudden closing of Revel Casino in Atlantic City, N.J., in 2014, resulting in the closure of four restaurants generating about $2 million per year. Additional loses resulted from the closure of an Amada location in New York last month.
The revenue loss put a strain on Garces’ overall business, which the company said generates about $40 million a year. In fiscal 2016, Garces Group recorded systemwide sales of $45 million, the company said.
Meanwhile, at least one supplier, J. Ambrogi Food Distribution Inc., filed objections to the bankruptcy on Thursday, according to court documents. J. Ambrogi filed a lawsuit earlier citing Garces Group for lack of payment.
Contact Lisa Jennings at [email protected]
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