A Moe’s Southwest Grill franchisee that operates over 50 locations has filed for bankruptcy and seeks to quickly end the leases at 16 locations, creating potential vacancies for shopping center landlords across Florida, Georgia and Virginia.
Palm Beach-based Quality Fresca I petitioned for Chapter 11 reorganization Tuesday in the U.S. Bankruptcy Court for the Southern District of Florida in West Palm Beach, listing between $10 million and $50 million in liabilities, between $1 million and $10 million in assets and 200 to 999 creditors — which include multiple landlords. The petition was signed by G. Michael Verdisco, the company’s chief restructuring officer.
As one of its first-day emergency motions, the franchisee asked the bankruptcy court for permission to reject the leases tied to restaurants it plans to close, arguing the locations are no longer needed and that keeping them would add unnecessary costs. It also wants to abandon any furniture, fixtures and other personal property left behind at the closed restaurants.
The lease rejection request affects properties owned by various shopping center landlords, including Brixmor Property Group, Regency Centers, Publix Super Markets and Benderson Properties. The affected locations are in retail centers across Clearwater, Jacksonville, Tallahassee, Tampa, Land O’ Lakes, Naples, Gainesville, Fort Myers, Palm Harbor, North Port, Odessa and University Park in Florida, as well as Alexandria, Virginia, and Brunswick, Georgia. If approved, the lease rejections would take effect retroactively to Aug. 4, the date the company filed for Chapter 11.
Once a lease is rejected in bankruptcy, landlords are left with unsecured claims and must pursue damages through the court case instead of collecting rent under the original lease.
Court filings show Quality Fresca generated $60 million in revenue last year and $26.4 million through mid-June. It also reported about $3 million in unsecured claims, including trade payables, operating expenses, amounts owed to landlords, and royalties and advertising fees owed to Moe’s franchisor.
Separately, the company owes about $16 million to secured lender GR Loanco 1, which holds liens on all of the company’s assets.
Hunter James Grasso and Jordi Guso, the attorneys representing the franchisee, did not immediately respond to requests for comment.
Quality Fresca operates Moe’s locations across Florida, Georgia, South Carolina, Virginia, Maryland, and Washington D.C., employing more than 1,200 staff, according to its website.
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