Register, or Login to view the article
October 4, 2021 – Further to a September 21st bidding procedures order [Docket No. 436] and the completion of an auction held on October 1st, the Debtors notified the Court that they have designated BBQ Growth, LLC ("BBQ" or the "Purchaser," an affiliate of BBQ Holdings Inc. as the successful bidder for substantially all of their assets [Docket No. 161]. The Purchser’s APA, memorializing the terms of a $4.2mn cash offer (plus up to $1.0mn of cure costs and assumed liabilities), is attached to the notification at Exhibit A.
Recently named stalking horse TJ Acquisition, LLC, an affiliate of stalking Serene Investment Management ("Serene") was designated as back-up bidder and is in line for a $150k break-up fee (see further below on Serene). Serene was the Debtors' second stalking horse in an on-again/off-again sale process, with the Court refusing on September 17th to approve a sale to the then credit bidding stalking horse VitaNova (the Debtors' DIP lender and a non-debtor affiliate) and then approving Serene as a stalking horse on September 21st (see further below on Serene and VitaNova).
A sale hearing is scheduled for October 7th.
BBQ Holdings, Inc. (NASDAQ: BBQ) BBQ Holdings is a national restaurant company engaged in the ownership and operation of casual and fast dining restaurants. As of May 21, 2021, BBQ Holdings had four brands with 137 “brick and mortar” locations in 31 states and three countries, including 47 company-owned and 90 franchise-operated restaurants. In addition to these locations, the Company opened eight Company-owned Famous Dave’s ghost kitchens operating within its Granite City locations, and 16 Famous Dave’s franchisee ghost kitchens operating out of the kitchen of another restaurant location or a shared kitchen space.
Key Terms of the BBQ APA:
- Purchaser: BBQ Growth, LLC, an affiliate of BBQ Holdings Inc.
- Seller: Fresh Acquisitions, LLC (Buffets)
- Purchase Price:In consideration of the sale of the Purchased Assets to Buyer, and in reliance upon the representations, warranties, covenants and agreements of Sellers set forth herein, and upon the terms and subject to the conditions set forth herein, the aggregate consideration for the sale and transfer of the Purchased Assets (the “Purchase Price”) shall be composed of the following:
- cash in an amount equal to $4,212,000 to be paid at Closing (the “Cash Payment”);
- all Cure Costs payable with respect to Assumed Contracts, including Cure Costs for Assumed Contracts that are Leases, in an amount not to exceed $1,000,000 in the aggregate;
- up to $100,000 in the aggregate for the assumption of outstanding ordinary course trade payables and accrued payroll as of Closing; and
- the assumption by Buyer of the Assumed Liabilities.
- Sale Objection Deadline, including Assumption Objections: October 5, 2021
- Sale Hearing: October 7, 2021
In a surprising turn of events, on September 20th the Debtors filed a motion requesting each of a bidding procedures order and a sale order [Docket No. 424]. On September 17th, the Court refused to confirm the Debtors' proposed sale to DIP lender and credit bidding stalking horse VitaNova Brands, LLC ("VN" or "VitaNova") without the Debtors then providing any hint that they had in recent weeks "received at least two indications of interest from third party buyers…[with]…sufficient interest to warrant an extremely expedited auction process."
Those indications of interest included one from Serene which was approved as a stalking horse at an emergency hearing held on on September 21st (the Serene APA filed at Docket No. 426). Serene has recently been an active player in respect of Chapter 11 assets, with purchases in respect of sugarfina, FoodFirst Global Restaurants and Warrior Custom Golf over the last several years. Serene also featured in the YogaWorks cases, serving as stalking horse before being outbid by MEP Capital Management LLC.
The Debtors' September 20th motion reads: “The Court is well versed in the Debtors’ prior efforts to sell their assets, having denied the Debtors’ first motion to sell substantially all of their assets to VitaNova Brands, LLC (‘VitaNova’). Given the Court’s initial ruling on August 24, 2021, the Debtors have continued to market the Debtors’ assets to third party buyers, with assistance and cooperation from the Committee and its professionals. After weeks of additional marketing, the Debtors have received at least two indications of interest from third party buyers and believe there is sufficient interest to warrant an extremely expedited auction process. Based on the Debtors’ discussions with the Committee, the Debtors believe that the Committee supports such an expedited and competitive process. Accordingly, the Debtors seek to establish new bidding procedures that designate Serene Investment Management, LLC (‘Serene’) as the new Stalking Horse Bidder, and authorize the Debtors to hold an auction within the next two weeks to determine the highest and best bids for substantially all of the Debtors’ assets.
The Debtors designate Serene, or its designee(s), as the stalking horse bidder (the ‘Stalking Horse Bidder’) pursuant to the terms of an APA executed between the Debtors and the Stalking Horse Bidder (the ‘Stalking Horse Bid’) filed contemporaneously with this Motion. As detailed above, the Debtors anticipate that the Stalking Horse Bidder will acquire substantially all of the Debtors’ Assets, including some or all of the remaining Tahoe Joe’s restaurants, all of the Debtors’ intellectual property, and certain estate causes of action as more fully described in the APA. In exchange for such Assets, the Stalking Horse Bidder’s consideration consists of $3,200,000.00 cash, payment of cure costs for assumed contracts and payment of cure costs for assumed real estate leases in an amount not to exceed $1,000,000.00, assumption of ordinary course operating administrative expenses through Closing not to exceed $100,000.00, and issuance of warrants in the purchaser entity, which provides potential upside for creditors in these cases. The Debtors seek approval, in connection with the Stalking Horse Bid, of a break- up fee in the amount of $150,000.00 (the ‘Break-Up Fee’) in the event that the Successful Bidder is not the Stalking Horse Bidder. The Debtors believe that such a Break-Up Fee is reasonable and consistent with the market for such transactions, and that approval of such Break-Up Fee will not discourage other potential competing bidders from participating in this process.”
Key Terms of Serene Stalking Horse APA:
- Purchaser: Serene Investment Management, LLC (“Serene”)
- Seller: Fresh Acquisitions, LLC (Buffets)
- Purchase Price: $4.3mn comprised of $3.2mn cash, plus cure costs for assumed contracts and cure costs for assumed real estate leases in an amount not to exceed $1.0mn and assumption of ordinary course operating administrative expenses through and including Closing not to exceed $100K.
- Bidder Protections: In connection with the Stalking Horse Bid, of a break- up fee in the amount of $150K (the “Break-Up Fee”) in the event that the Successful Bidder is not the Stalking Horse Bidder.
[As previously reported] On September 17th, further to the apparent collapse of the Debtor's relationship with DIP lender and stalking horse VitaNova, the Court hearing the Fresh Acquisitions case refused to approve the sale of the Debtor’s assets to VitaNova [Docket No. 421].
On July 29, 2021, further to a May 27th bidding procedures order [Docket No. 203] and absent the receipt of any other qualified bids, the Debtors notified the Court that they had canceled the auction scheduled for July 29, 2021 and designated Stalking Horse Bidder as the successful bidder ($3.5mn credit bid of DIP debt which includes a $500k roll-up) for substantially all of their assets [Docket No. 326]. The VitaNova APA is attached as Exhibit A-1 to the notice.
VN, in addition to providing the Debtors’ current DIP financing, is a non-Debtor affiliate that provides the Debtors “with certain administrative functions, such as accounting, cash management, tax, payroll, HR, IT, marketing, legal and insurance and that itself is owned and controlled by certain individuals who control the Debtors’ ultimate owners and sit on the Debtors’ respective boards.”
The Debtors provide a corporate structure chart (see below) which neglects to specify the exact relationship of VN to the Debtors, but it would appear that VitaNova is the Debtors’ ultimate parent (VitaNova CEO Jason Kemp provides the CEO quote in the Debtors’ filing date press release). In January 2021, to avoid conflicts (given the multiple hats worn by the VitaNova management team), the Debtors appointed an independent director.
On August 24th, VitaNova Brands, LLC, in its capacity as DIP lender, filed a notice of termination of the Debtors’ DIP Facility [Docket No. 391, with notice letter attached as Exhibit 1], citing the Debtor's failure to meet asset sale milestones and the resulting triggering of an event of devault under the DIP credit agreement. A Court required notice in respect of that termination notice was subsequently filed on September 15th at Docket No. 416. that notice provides that the Debtor can continue to use cash collateral to "fund the Carve Out Reserve and (b) by Tahoe Joe’s Inc. to maintain its operations and sell its assets at least through close of business on Thursday, September 30, 2021."
About the Debtors
Fresh Acquisitions, LLC (Buffets, Inc., DBA Ovation Brands, Inc), engages in the ownership and operation of a chain of restaurants in the United States. The Debtors’ concepts include six buffet restaurant chains and a full service steakhouse, operating under the names Furr’s Fresh Buffet®, Old Country Buffet®, Country Buffet®, HomeTown® Buffet, Ryan’s®, Fire Mountain® and Tahoe Joe’s Famous Steakhouse®, respectively.
On April 20, 2021, Fresh Acquisitions, LLC and 14 affiliated Debtors (“Fresh Acquisitions” or the “Debtors”) filed for Chapter 11 citing “the uncertainty, unexpected challenges, and ever-changing landscape resulting from the COVID-19 pandemic.” At filing, the Debtors, which do business as Furr’s and Furr’s Fresh Buffet and own and operate a chain of buffet style restaurants, noted estimated assets between $1.0mn and $10.0mn; and estimated liabilities between $10.0mn and $50.0mn.
This is the Debtors fourth turn through the chapter 11 turnstiles, having previously emerged in May 2017, July 2012 and April 2009.
The Debtors and their brands are all privately owned. The Debtors own and operate their brands through a number of direct and indirect subsidiaries. The Furr’s Fresh Buffet® brand is owned by Fresh, which has the following corporate structure:
The Debtors’ remaining brands (Tahoe Joe’s®, Old Country Buffet®, Country Buffet®, HomeTown® Buffet, Ryan's® and Fire Mountain®) are owned directly or indirectly by Debtor Buffets, LLC (“Buffets”), a Minnesota limited liability company, which in turn is owned by non-debtor Alamo Buffets, LLC, a Texas limited liability company. The corporate structure for Buffets is set forth below:
Read more Bankruptcy News