An attorney for Danny Hendon, founder of Danny's Family Car Washes, filed the paperwork in U.S. Bankruptcy Court in Arizona on February 3, just days after M&I Marshall & Ilsley Bank sought to have a court-appointed receiver take over those businesses, according to a report in The Phoenix [image-nocss] Business Journal.
M&I initiated court actions February 1 by filing a complaint in Maricopa Superior Court. The bank requested that the court appoint a receiver to take over the LLCs associated with three Danny's car wash locations and one Danny's convenience store, according to the report. In court documents, M&I said Danny's had defaulted on four loans tied to those properties. Attorneys for M&I said the amount due as of January 28 was $12.9 million, the report stated.
A hearing to consider the receivership motion was scheduled for February 4. But Danny's chose to file for bankruptcy protection instead on the four properties: Danny's 59th Ave. LLC, Danny's Happy Valley LLC, Danny's Raintree & Northsight LLC and Danny's Scottsdale & Shea LLC.
Scottsdale, Ariz.-based Danny's Family Cos., the holding company for all four LLCs, issued a written statement February 10 accusing M&I of "aggressive lending tactics," according to the Journal. The statement said Danny's was current with payments and that the bank was using "legal language" to put the LLCs in default. The company accused M&I of doubling its interest rate.
Calls by CSP Daily News to Danny's and its attorney were not returned by press time.
While each of the bankruptcies was filed separately, each generally tells a similar story. In one, for example, Danny's CFO Kent Despain noted, "Like virtually every car wash and convenience store in the country, the debtor has suffered significantly as a result of the credit crisis and economic recession that has gripped the nation.... The debtor's business, ownership and operation of this business has been particularly hard hit by these difficult economic times. Client losses have impacted negatively the debtor's cash flow and ability to service debt."
According to court documents, Danny's, which owns and operates 16 car washes and c-stores, owes M&I more than $12 million on the four sites.
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