NASHVILLE Tenn. SouthEast Waffles LLC, a bankrupt Waffle House franchisee, has reportedly resolved a dispute with unhappy creditors by appointing a chief restructuring officer.
Gary Murphey, of Atlanta-based Resurgence Financial Services LLC, is expected to work with the franchisee until its Chapter 11 reorganization is complete, for a period not to exceed four months. He was described in press reports as a veteran of reorganizing distressed companies.
The 113-unit franchisee’s creditors had requested that the bankruptcy court appoint a trustee and examiner in the case. But they were said to withdraw the request upon Murphey’s appointment. Murphey’s duties were described as overseeing the troubled franchisee’s operations and also any financial irregularities that had previously transpired.
SouthEast filed for Chapter 11 on August 25, asserting that the company was forced to seek bankruptcy protection because of “accounting irregularities,” and cited an “abrupt resignation” of an employee. The employee was not identified in the filing.
Creditors First Bank NA and SunTrust had originally called for the complete removal of chairman and chief executive Jim Schaub. The creditors claimed in court filings that Schaub mismanaged the company and received excessive compensation.
Schaub reportedly was retained by the company, but with no control over finances or operations. Instead, he will draw a $20,000 monthly salary and will be available for consulting services.
Schaub did not return phone calls.
Glenn Rose, who represents SouthEast for the Nashville law firm Harwell Howard Hyne Gabbert and Manner, said in an interview last week that the franchisee has a proof of claim against it for back taxes by the Internal Revenue Service. Franchsior Waffle House Inc. said the franchisee’s agreement had been terminated because it was behind on its payments.
Rose said last week that all of SouthEast’s restaurants would continue to operate.
SouthEast Waffles, based here, operates in five states.