Trustee shutters Red Onions, seeks individual buyers; deal falls through to sell last 10 restaurants as a group.The 10 remaining Red Onion restaurants closed Oct. 25 after a deal to sell the chain fell through, and the trustee was given until Nov. 1 to find individual buyers for each of them. The jobs of about 900 employees are at stake. The Red Onion's parent company, known both as International Onion Inc. and Newman Holdings Inc., filed for Chapter 11 bankruptcy protection in November 1992 after struggling with cash flow problems caused both by the recession and by attempts to promote an outdateD restaurant concept. Dissatisfied creditors forced the West Covina-based company into Chapter 7 in March. Jeffrey Coyne was appointed as a trustee to either find a buyer for the chain or liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the it. J & W Restaurant Partners, a partnership formed by three men in the hotel and real estate business, made a $4.25-million bid for the chain in August. A hearing in which a public auction for the chain was to be held was originally scheduled for Sept. 28. At that hearing, U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. Judge Lisa Hill Fenning postponed the auction until Oct. 25, provided J & W give Coyne an initial payment on or before Oct. 1, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. court documents. But J & W never came through with the money, and Coyne ordered that the restaurants be closed. The judge gave Coyne until Nov. 1 to sell most of the closed eateries to individual owners. "The buyer that was lined up didn't follow through and perform as we expected him to," said the trustee's attorney, David Weinstein David Weinstein may refer to:
As of press time, Weinstein said Coyne was looking into whether the sale of the individual restaurants could actually be accomplished by the Nov. 1 deadline. "I am very disappointed that the sale fell through, especially for the sake of the employees," said Red Onion Chairman and President Ronald Newman. Meanwhile, the company's unsecured creditors Unsecured Creditor An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. may be left in the lurch lurch 1 intr.v. lurched, lurch·ing, lurch·es 1. To stagger. See Synonyms at blunder. 2. To roll or pitch suddenly or erratically: The ship lurched in the storm. . If the restaurants are liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. , "the chances of the unsecured creditors obtaining any recovery of their claims is extremely doubtful," said Jeffrey Pomerantz, an attorney with the Century City law firm Pachulski, Stang, Ziehl & Young, which represented the creditors when the restaurants were in Chapter 11. Of the largest secured creditors One who holds some special monetary assurance of payment of a debt owed to him or her, such as a mortgage, collateral, or lien. , Los Angeles-based Rykoff Co., is owed $595,000; Los Angeles-based General Star Management Co. is owed $554,000 and Long Beach-based M.D.F.C. Equipment Leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
The company's Chapter 7 and Chapter 11 administrative expenses and secured creditors must be paid before the unsecured creditors get a dime, Pomerantz noted. Tom Alnes, owner of Carson-based Horizon Litho, an unsecured creditor, said he has had a full year -- while the Red Onion chain was in both Chapter 11 and Chapter 7 -- to brace for the reality of receiving little or nothing for his claims. "I'm not really shocked by it at all," he said. "From the get-go, they were in pretty bad shape." |
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