Keystone Pizza Partners, LLC, asks the U.S. Bankruptcy Court for the District of Kansas to authorize the sale of substantially all assets to Maps14 Foods, Inc. and its designees or assigns for $2,325,000, cash, less applicable adjustments, subject to higher and better offers.
The Debtor is a Kansas limited liability company that currently owns and operates a chain of 16 Pizza Hut restaurant locations throughout the greater Allentown, Pennsylvania area. It employs approximately 350 people in its operation.
The principal assets of the Debtor include 16 operating Pizza Hut restaurant locations, two parcels of real property underlying two of those operating restaurants, as well as various items of personal property consisting mainly of pizza restaurant equipment and furnishings (“Restaurant Assets”).
Leases concerning the Restaurant Assets that the Debtor proposes to sell pursuant to the Motion are described on Schedule 1.1(e) of the Purchase Agreement. The Debtor previously rejected certain unexpired leases which it believed were unattractive to prospective purchasers, and may reject additional unexpired leases or executory contracts.
As detailed more fully in the Cash Collateral Order, Pacific Premier Bank has a senior secured lien on substantially all of the Debtor’s assets to secure two loans, the current outstanding balance of which is approximately $3.7 million. The Debtor proposes to sell the Restaurant Assets free and clear of the Bank’s liens, with such liens to attach to the proceeds of the sale, and that such proceeds net of costs of sale approved by the Bank be paid to the Bank at the closing of the sale.
The Debtor sought and obtained authority to retain sales professional MarshallMorgan, LLC to market and sell the Restaurant Assets.
On June 5, 2020, the Debtor filed a Motion for Order Approving Overbid and Auction Procedures, and Break-up Fee, which the Court approved on June 16, 2020. On July 20, 2020, the Debtor filed a supplemental notice to the Procedures Order.
The Notice sets forth the following deadlines:
(a) Deadline for competitive bids: 5:00 p.m. (CT) on July 24, 2020;
(b) Auction (to the extent qualified competitive bids are timely received): Beginning at 10:00 a.m. (CT) on July 28, 2020 by Zoom or other service, and continuing for so long as qualified competitive bids are timely received;
(c) Sale Hearing: July 31, 2020, subject to the Court’s availability. If the date of the Auction changes, or there is no Auction, the Sale Hearing will be held subject to the Court’s availability; and
(d) Closing: the Closing set forth in the Purchase Agreement is to occur as soon as reasonably practicable after the entry of a sale order and satisfaction or waiver of the conditions to Closing, or as set forth in an asset purchase agreement of the Successful Bidder (as defined in the Procedures Order), as the case may be. The Outside Date set forth in the Purchase Agreement is Aug. 31, 2020.
With the assistance of the Broker, the Debtor obtained an offer from the Proposed Purchaser, which is owned and operated by non-insiders that have no relationship to the Debtor or its owner. The Purchase Offer’s terms are set forth in the Asset Purchase Agreement dated July 16, 2020. The Purchase Offer is a 100% cash offer of $2,325,000, less applicable adjustments provided in the Purchase Agreement. The Purchase Offer provides that the Proposed Purchaser will be responsible for paying any monetary cure amounts prior to assumption and assignment of the Restaurant Leases and Assumed Executory Contracts, without adjustment to the purchase price. The proposed cure amounts are listed on Exhibit 2.
The Purchase Agreement is contingent upon Pizza Hut’s approval of the Proposed Purchaser as an approved franchisee and issuance of a new franchise agreement authorizing operation of the Restaurant Assets. Because the Proposed Purchaser is a current franchisee of Pizza Hut, the Debtor anticipates the vetting and approval process by the franchisor should be expedited.
The Debtor accepted the Purchase Offer subject to the Court’s approval. The Proposed Purchaser has posted an escrow deposit of $232,500.
To the extent Debtor receives timely qualified competitive bids, the Auction occurs and there is a Successful Bidder other than the Proposed Purchaser, the Debtor similarly asks approval of such sale and will supplement the Motion accordingly.
The Debtor asks authorization to sell substantially all of its assets free and clear of liens, claims and encumbrances and other interests to the Proposed Purchaser or the Successful Bidder, as the case may be. It anticipates that the secured creditor will consent to the sale.
The Debtor proposes to assume the Restaurant Leases and assign them to the Proposed Purchaser, or to the Successful Bidder, as the case may be. It also proposes to assume the Assumed Executory Contracts described on Schedule 1.1(e) of the Purchase Agreement, and assign them to the Proposed Purchaser, or to the Successful Bidder.
As part of the sale, the Debtor asks to compensate the Broker for the sales commission from the sales proceeds per the Broker Order. It believes the Broker’s compensation is reasonable and was incurred as an actual, necessary expense for the estate. The Broker materially assisted the Debtor with negotiating and obtaining the Purchase Offer from the Proposed Purchaser.
A copy of the Agreement is available at https://tinyurl.com/yxcn3xaw from PacerMonitor.com free of charge.
MAPS14 FOODS, INC.
Attn: Sanjay Gupta, Secretary
1300 Virginia Drive, Suite 201
Fort Washington, PA 19034
The Purchaser is represented by:
Rishi K. Desai, Esq.
RKD LAW DESAI & ASSOCIATES LLC
241 Forsgate Dr, Ste 204
Monroe, NJ 08831
About Keystone Pizza Partners
Keystone Pizza Partners, LLC, a pizza franchisee in Overland Park, Kansas, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No. 20-20709) on May 3, 2020. At the time of the filing, Debtor estimated $1 million to $10 million in both assets and liabilities. Judge Robert D. Berger oversees the case. The Debtor is represented by Spencer Fane, LLP.