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BOSTON - Generating more questions than answers among thousands of terminated employees, stunned creditors and franchisees, Ground Round's parent company filed for Chapter 11 bankruptcy here Feb. 19, six days after shuttering its nearly 60 corporate restaurants and the chain's headquarters.
Officials of Braintree, Mass.based American Hospitality Concepts Inc., or AHC, which owns the 35-year-old casual-dining brand, still were not talking after their court petition for protection from creditors. That action followed a termination of the company's credit facilities by Foothill Capital Corp. and Boston Ventures Management Inc., prompting AHC's abrupt Feb. 13 closures and firings of restaurant workers nationwide, including about 35 corporate employees.
According to court filings, AHC owed $3.6 million to Foothill Capital, a corporate lending unit of San Francisco-based financial services company Wells Fargo & Co., as of the petition's date. That was a substantial reduction from the $26 million owed in November 2001, according to AHC's filing.
A spokesman at Foothill Capital, now called Wells Fargo Foothill, neither would confirm nor deny that it was a secured creditor of Ground Round or its parent company.
Boston Venture, which, according to filings, had advanced funds to AHC numerous times, held an overdue balance of $15 million. Officials at the Boston-based private equity firm had not returned calls seeking comment by presstime.
The mass layoffs and hasty restaurant lockups on that Friday afternoon, catching scores of diners in the middle of unfinished meals, were of a scale not seen in the restaurant industry in recent memory. The Massachusetts attorney general's office said it was investigating complaints about unpaid wages and benefits from terminated Ground Round employees, including workers at nine restaurants in that state.
Also left hanging on the sidelines were operators of the 72 franchised Ground Round Bar & Grill restaurants that remained open in 19 states and at least 20 trade creditors that are owed more than $2 million, according to preliminary documents filed with the U.S. Bankruptcy Court in Boston.
"It has been the most crazy [few] days of my life," Michael A. Ludwig, president of the chain's independent Ground Round Owners Council and manager of a franchised Ground Round unit in Hadley, Mass., said. "And that's including the days before my marriage."
Top of mind for Ludwig and...