MIAMI, FL– November 26, 2024, Bast Amron attorneys Jeff Bast, Dana Quick, Jaime Leggett, and together with senior paralegal Jorge Miranda, secured a win for creditors by obtaining the conversion of several of the jointly administered SBG Burger [fn1] cases from Chapter 11 to Chapter 7. Bast Amron represented the Official Committee of Unsecured Creditors and sought the alternative relief of appointment of a Chapter 11 Trustee, appointment of an examiner, or conversion of the cases to Chapter 7 when discovery revealed that millions of dollars of funds appeared to have been transferred to the Debtors’ owner, for his benefit, or to or for the benefit of his non-debtor companies prior to the petition date.
The Debtors, a conglomerate of 10 related companies that pre-petition operated 70+ Wendy’s franchise locations in Florida, Alabama, and the Midwest, objected to the relief sought by the Committee, arguing that the potential transfer claims were not sufficiently valuable to keep the Debtors in bankruptcy. They filed a cross-motion to dismiss most of the pending cases. The Debtors’ senior secured creditor, which had already had a significant portion of its claim repaid through the sale of the Debtors’ assets, also supported dismissal over conversion.
However, the Honorable Judge Tiffany Geyer, United States Bankruptcy Judge for the Middle District of Florida, found the Committee’s arguments and preliminary investigation into the potential transfers to be too compelling to ignore, denied the Debtors’ request for dismissal, and ruled to convert most of the pending cases to Chapter 7, where an impartial trustee could investigate, evaluate, and prosecute the potential transfer claims. Without conversion of these cases at the Committee’s request, the cases likely would have been dismissed without any payments made to the vast majority of the Debtors’ unsecured creditors.
[FN1] The cases converted include: Starboard Group of Space Coast, LLC; Starboard Group of Southeast Florida, LLC; Starboard Group of Tampa, LLC; Starboard Group of Tampa II, LLC; Starboard Group of Alabama, LLC; 7 S&M Foods, LLC; 9 S&M Foods, LLC; and 10 S&M Foods, LLC. The Bankruptcy Court reserved ruling on conversion of SBG Burger Opco, LLC (the lead case), and Starboard with Cheese, LLC.
About Bast Amron
BAST AMRON is a boutique law firm focused on business insolvency and litigation. Our insolvency practice emphasizes workouts, restructurings, liquidations, bankruptcy, and bankruptcy avoidance. We represent debtors, creditors, committees, trustees, and other fiduciaries in bankruptcies, receiverships, and assignments for the benefit of creditors. Our litigation practice is primarily plaintiff-oriented. We know how to investigate, formulate, and prosecute claims arising from business disputes. By combining our business insolvency knowledge with our extensive courtroom experience, we successfully guide our clients through all aspects and types of commercial litigation in state and federal courts across the country. Whether the issue is litigation or insolvency, or both, we view our clients’ needs through a holistic lens to formulate and implement dynamic solutions to their most important challenges. Click here to visit our website.