The assets for Old Country Buffet’s former owner have been sold to the parent company of Famous Dave’s and the company is winding down its bankruptcy.
But that doesn’t mean an end to the controversy over the operation of the company, which had been known as Buffets LLC and then Fresh Acquisition. Last week, a federal bankruptcy judge signed off on Fresh Acquisitions’ bankruptcy plan, which gives a trustee the go-ahead to sue its former owners for nearly $20 million in misused funds.
Creditors for some $75 million in unsecured debt have accused the former owners of a variety of improper transfers and misused funds totaling $19.75 million.
They include $4 million in misused Paycheck Protection Plan funds, along with $5.25 million in “excessive management fees” and $3.85 million in unexplained transfers to affiliates and other insiders.
Creditors also say there are $8.6 million worth of additional transfers of funds or real estate, unexplained credit card debt as well as a $2 million insurance policy to protect the personal assets of directors and officers.
According to court filings, the people who owned or controlled Fresh Acquisitions have a combined net worth of $62.7 million, including $31.6 million in cash.
Fresh Acquisitions filed for bankruptcy in April. The company represented the last vestiges of what had been a massive, nationwide operator of buffet brands including Old Country Buffet, HomeTown Buffet, Ryan’s and Furr’s. At one point it had been named Buffets Inc., Buffets LLC or Ovation Brands and operated more than 650 locations. But over the past decade, the company has filed for bankruptcy four times.
Investment firm Food Management Partners acquired the company in 2015 and merged it with Furr’s, which it also acquired out of bankruptcy. The company in the years since then have been accused in lawsuits of neglecting facilities or forcing employees to work off the clock.
Fresh Acquisitions’ bankruptcy filing earlier was the fifth total involving the company or its brands. At the time it had an agreement to sell itself to a company called VitaNova for $3.2 million, all of which would have been used to pay off a loan VitaNova made to Fresh to get through bankruptcy. At the time of the filing, the only restaurants operating were the six units of the Tahoe Joe’s steak brand.
The court judge denied the sale after creditors raised questions about the deal and the relationship between VitaNova and Fresh Acquisitions. But they also questioned the pre-bankruptcy transfers and misused loans.
The company was put back on the block again and later sold to BBQ Holdings for $4.2 million. The deal gave BBQ the Tahoe Joe’s chain as well as the intellectual property for the buffet brands, but the company is uninterested in reviving the other chains—making them more or less dead.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.