A federal bankruptcy judge has cleared the way for a controlling interest in The Palm steakhouse chain to be sold by the families that have owned it since 1926.
Proceeds would be used by direct descendants of the luxury brand’s founders to pay certain of their cousins the $120 million they were awarded in an earlier lawsuit involving licensing fees. Yet those would-be beneficiaries had filed a motion in the U.S. Bankruptcy Court of Central Florida to find a way of generating the funds without resorting to a sale.
Judge Caryl Delano denied the motion, obligating Bruce Bozzi and Walter Ganzi to sell their majority interest in the brand that was founded by their respective grandfathers.
But the decision may not end the legal battle that has raged within the Bozzi and Ganzi clans for at least a year. The Palm’s operating company, Just One More Restaurant, filed for Chapter 11 protection from creditors in March in part to provide time for principal shareholders Bozzi and Ganzi to appeal the directive to pay three of their cousins the $120 million.
The warring parties agreed that the bankruptcy filing would also provide an opportunity to find a solution to the dispute over licensing fees. The cousins had charged Bozzi and Ganzi, who own 21 of The Palm’s 24 locations, with paying below-market royalties to the brand’s parent company.
But instead of filing a plan of reorganization or hammering out an accord with their angry cousins, Bozzi and Ganzi filed for personal protection from creditors under Chapter 7 of the federal bankruptcy code in mid-October. Essentially, they were shielded from their debts at least temporarily.
The group of cousins—Gary Ganzi, Carol Breen and the estate of the late Charles Cook—had asked in their motion that the Florida bankruptcy court withdraw Just One More Restaurant’s Chapter 11 protection. They argued that the company’s assets are worth 10 times the amount the cousins are owed and that Just One More Restaurant should have still been collecting royalties from the 24 branches of The Palm. The contention was that the company didn’t need protection from creditors.
Delano disagreed. Her denial of the motion enables Bruce Bozzi and Walter Ganzi to sell their restaurants and the intellectual property of The Palm.
The duo own 80% of The Palm’s parent company. The other 20% is held by the cousins.
Pio Bozzi and John Ganzi opened the original The Palm in 1926. The restaurant would become a New York City landmark before closing in mid-2017.
The concept is known for its thick, simply grilled steaks and walls decorated with caricatures of customers.
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