The contentious bankruptcy of the 90-unit Burger King franchisee Toms King Holdings appears to be nearing its conclusion.
Eighty two of the 90 locations appear to be a court approval away from being sold, according to court documents. Burger King itself won an auction earlier this month for 17 of the 90 locations, in Ohio, Illinois and Pennsylvania. An entity known as DC Burger won the bid for 37 locations in Virginia. And Karali North America won the bidding for 27 locations in Ohio and Pennsylvania. Restaurant Concepts acquired the lease for one location in Pennsylvania.
Exactly how much the restaurants fetched in the auction is not yet known. But the bankruptcy court had earlier approved a “stalking horse bidder,” 13th Floor Capital, which agreed to pay $31 million for 79 of the 90 restaurants. 13th Floor Capital is a franchisee of Auntie Anne’s, Cinnabon and Jamba. As the stalking horse, it sets a sale price floor for the restaurants, and it was listed as the backup bidder, according to court documents.
The deal sets the stage for court approval of the sale of the restaurants three months after Toms King declared bankruptcy, the first in a string of major issues affecting large-scale Burger King operators. Meridian Restaurants Unlimited, which operates more than 100 locations out west, has since declared bankruptcy and another operator, Texas-based EYM Group, closed its 26 Burger King restaurants in Michigan.
The process has not been without its acrimony. Burger King opposed 13th Floor’s stalking horse bid, arguing that it hadn’t approved the company as one of its franchisees. Burger King also opposed that company’s role as the backup bidder if a sale to DC Burger or Karali do not go through.
And court filings have also revealed that Toms King itself last September had a plan that would have allowed the company to maintain ownership of the franchise through a bankruptcy process. But Burger King in a November meeting indicated that it would “do everything in its power to prevent” Toms King from retaining ownership.
Toms King also accused Burger King of “creating as many roadblocks to [Toms King’s] continued ownership as possible.”
That filing also noted that it took some time for a stalking horse bidder to materialize, despite months spent marketing the restaurants to potential buyers.
Burger King operators have struggled coming out of the pandemic as low sales and weak profits, combined with soaring inflation, have resulted in closures and bankruptcy filings across the country. The company is investing $400 million in remodels and marketing in a bid to turn it around. But the problems have also led to a massive overhaul of corporate management, both at Burger King itself and at parent company Restaurant Brands International, which hired Patrick Doyle last year to be executive chairman.
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