Snuffer’s Restaurants files Chapter 11 Bankruptcy on March 4, 2013
Snuffer’s Restaurants, Incorporated filed for Chapter 11 Bankruptcy on March 4, 2013 in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division under Case No. 13-31095-SGJ-11. The case is pending before the Honorable Stacy G. Jernigan, United States Bankruptcy Judge.
The Debtor estimates that total liabilities and total assets are between $1-10 Million. According to the Dallas Morning News, counsel for the Debtor indicated that the company has about $6.5 Million in debt including the Texans Credit Union debt discussed blew, and that the company has a positive cash flow at the present time.
“First Day” hearings will be held in the case on March 5, 2013 at 9:30 a.m.
Management is acting as its own bankruptcy trustee as a debtor-in-possession.
In connection with the bankruptcy filing, primary owner Patrick D. Snuffer filed pleadings with the Court explaining the current situation:
“Snuffer’s is a Texas corporation that I founded in 1978. I opened the first Snuffer’s Restaurant & Bar that same year. Over the ensuing thirty-five years, the Debtor’s brand has expanded from the original location to five owned locations in Addison, Preston Center, Rockwall, Southlake and Highland Village.
“Throughout its long history, Snuffer’s has enjoyed a loyal customer base and is well known and regarded in the Metroplex—thanks in no small part to its famous cheddar fries, tasty burgers and friendly service.
“Due to the recent downturn in the economy and increased competition, Snuffer’s experienced a decline in sales that led to difficulty paying its debt to Texans Credit Union and taxes due to the Internal Revenue Service. At this time, the Pre-Petition Lender is owed approximately $2.9 million and asserts a first priority lien on substantially all of the Snuffer’s’ assets. Similarly, the IRS asserts a lien on substantially all of the Snuffer’s’ assets to secure outstanding taxes.
“Since the majority of the Debtor’s suppliers are on C.O.D. terms with the Company, unsecured debts are primarily legacy claims that the Debtor has been unable to pay due to its liquidity problems.
“Snuffer’s has approximately 400 employees, of which, approximately 330 are part-time employees. Two employees work at the corporate headquarters located at 16475 Dallas Pkwy Suite 185, Addison, Texas 75001. I own ninety-seven percent (97%) of the equity of the Company.
“Snuffer’s utilizes a number of vendors to supply its restaurants with food and other supplies and services. I estimate that Snuffer’s’ creditors, including its vendors but excluding employees, number over 100. …
“The Company’s Cash Management System consists of ten bank accounts, eight of which are maintained by the Debtor at Branch Bank and Trust Company and two of which are maintained at Citibank, N.A. …
“In its ordinary course, the Debtor sells gift cards to its customers (a “Customer Program”). This Customer Program is an essential component of the Debtor’s business strategy of ensuring customer satisfaction, driving sales, meeting competitive pressures, developing and sustaining customer loyalty, improving profitability, and generating goodwill for the Debtor and its products, thereby retaining current customers, attracting new ones, and ultimately enhancing net income. If the Debtor were to hastily terminate this Customer Program and fail to honor its outstanding gift cards, the Debtor would lose the good will of its customers as they lost faith in the Debtor’s ability to keep its promises. Accordingly, the Debtor has requested authority to maintain this important Customer Program. …
“Prior to the Petition Date and in the ordinary course of its businesses, the Debtor paid wages, salaries, and other compensation and benefits to its employees. The Debtor’s employee obligations accrue on an ongoing and continuous basis but are paid only periodically. Snuffer’s intervening bankruptcy filing has resulted in the accrual of unpaid prepetition wages, salaries and/or other compensation owed to employees and related third-parties. If the Debtor does not pay these wages, it may lose employees. The loss of employees would interfere with the Debtor’s ability to run its restaurants and would negatively impact the value of the Debtor’s estate. Accordingly, the Debtor filed the Prepetition Wages Motion to address these unpaid prepetition obligations. [The Debtor intends to ensure that employees are not left with unpaid wages.]
According to the Dallas Morning News, counsel for the Debtor has indicated that the owners plan to offer seven restaurants for sale.
The Debtor is represented by lead counsel Stephen A. McCarlin of Garere Wynne Sewell LLP of Dallas Texas.
- Will there be an Unsecured Creditors’ Committee?
- More information regarding the Chapter 11 process
- What is a Debtor in Possession?
- Voluntary Petition 3-4-13
- Affidavit of Patrick Snuffer re First Day Matters
- List of 20 Largest Unsecured Creditors