The Grape files Chapter 11
The parent company behind the trendy The Grape bistro and wine bar filed Thursday for bankruptcy protection, almost exactly a year after it obtained more than $2 million in debt financing.
Atlanta-based The Grape Enterprise Group Inc., The Grape's franchisor and owner of two of the chain's 14 operating restaurants, requested protection in United States Bankruptcy Court Northern District of Georgia. The Grape Enterprise Group operates the Phipps Plaza location and one in Birmingham, Ala.
Twelve operating stores are owned by franchisees, including the wine bar/bistros in Inman Park, Atlantic Station and Vinings. These stores are not party to the Chapter 11 filing.
Lisa Lake, a spokeswoman for The Grape Enterprise Group, said the restaurants would continue to operate normally and no job cuts are planned.
Jack Mazur, the company’s founder and chairman, started the company in Vinings in 1999. The restaurants also include an attached retail wine store.
Subsidiaries, including The Grape Franchise Group LLC , The Grape Development Co. LLC and The Grape Realty LLC, also filed for protection. The companies have requested a judge to combine all companies into a single filing.
Chapter 11 permits the filing company to remain in business while it restructures its debt.
According to the filings, the combined company has debts of between $1 million to $10 million and assets of less than $50,000.
Starting last November, The Grape Enterprise Group issued more than $2 million in secured debt, which it has been unable to pay off.
It received separate debt financing agreements of $1 million and $230,000 from its current CEO Gregg Freishtat, under his investment company, Number 3 Investment Partners LLLP.
In December, The Grape Enterprise Group received $500,000 in debt financing from D&L Associates LP and half a million dollars from Gary and Kathryn Slagle.
The combined companies also list more than $1 million in unsecured claims from numerous creditors. One such claim is for nearly $280,000 in attorneys’ fees owed by its franchise group subsidiary.
The Grape Realty, one of the company’s subsidiaries, also owes unsecured claims of an unknown amount to the landlords for several of its franchises.
Freishtat, The Grape Enterprise’s CEO and largest creditor, is supplying the company with $450,000 in credit while the company is in bankruptcy protection proceedings.
He and CFO Neal McEwen have asserted claims of $111,177 and $32,452, respectively, for “deferred” salaries, according to the filings.
The bankruptcy protection filings come just weeks after subsidiary The Grape Franchise Group formed a board of directors and advisory council full of restaurant industry heavy hitters.
The board includes Mazur, the company’s founder and chairman, and Freishtat.
Other board members are: Michael Coles, former CEO of Caribou Coffee; Richard Nicolosi, founder of business management and consulting firm Nicolosi Advisors; and Thomas A. Gordy, president and CEO of CeloNova BioSciences Inc.
The advisory council for The Grape Franchise Group includes: former LongHorn Steaks Inc. Chief Financial Officer Ron San Martin; Alan Barocas, founder of retail real estate consulting firm Alan J. Barocas & Associates LLC; Bill Palmer, president and CEO of Apple Creek Management Co., which owns 40 Applebee’s franchises; Paterno Wines Vice President for Marketing David Lane; and Gerry Hornbeck, founder of Concept Management Inc., a restaurant strategic planning and management firm.