Operator Seenu Kasturi uses other business, ARC Fat Patty's LLC, to purchase debt.
Twenty-five-unit Applebee’s franchisee Wisconsin Apple is asking a federal court to dismiss its bankruptcy case after ARC Fat Patty’s, LLC agreed to purchase its debt.
ARC Fat Patty’s—parent of burger bar Fat Patty’s—and Wisconsin Apple are both led by Seenu Kasturi. As part of the settlement, ARC will cover the debt owed to lender Bremer Bank. The hearing to dismiss the bankruptcy is scheduled for November 17.
“There is no reason to continue the case in Chapter 11 inasmuch the acquisition of the Bremer note by ARC will provide greater liquidity and flexibility to address the problems caused by the Covid pandemic,” the court filing said. “The remaining problems caused by the pandemic are not matters that can or should be cured through a lengthy and possibly expensive Chapter 11 proceeding. It is in the best interest of the Debtor and all parties in interest that the case be dismissed because, with the settlement in place, the claims and interests of all parties can be addressed in the ordinary course of business and without need for a Chapter 11 proceeding.”
Wisconsin Apple was formed in November 2019 when Louisiana Apple acquired Applebee’s units from Wisconsin Hospitality Group. The acquisition was financed by Bremer.
In the initial months, service grades remained high, but operations were seriously hampered when the COVID pandemic forced dining rooms to close. Stores reopened in May, but have periodically closed in recent months because of employees testing positive for COVID. Recently two stores were closed for fumigation and retesting.
Kasturi said in the court filing that stores are earning just 30 percent of what they made between November 2019 and March and that Wisconsin Apple is losing between $250,000 and $300,000 per month. Prior to the filing, Wisconsin Apple and Bremer entered a forbearance agreement involving the payment of past due interest and the compilation of financial records. Apple listed payments of $197.680.43 on August 3, $29,604.07 on September 2, and $28.649.11 on September 15.
The bankruptcy was filed on short notice because it was in response to Bremer appointing a receiver without warning. Kasturi said he choose bankruptcy to prevent his restaurants from closing and the loss of more than 600 jobs.
“Dismissal is in the best interests of all creditors because it will allow the Debtor to continue as a going concern and not risk the loss of its franchises due to the filing of the Chapter 11,” the filing said. “The dismissal will further allow the Debtor to retain its key [personnel] who are essential to the operation of the Debtor’s restaurants."