SCOTTSDALE, Ariz. -- A judge has approved the bankruptcy reorganization plan for a group of car washes, restaurants, gas stations and convenience stores owned by Scottsdale, Ariz.-based Danny's Family Cos., and for its founder and CEO, Daniel Hendon, reported the Arizona Republic.
According to documents filed in U.S. Bankruptcy Court for the District of Arizona cited by the newspaper, Judge Eileen Hollowell approved the Chapter 11 reorganization plan on Friday, said the report. The plan establishes a five-year schedule for the repayment of lenders, car wash vendors and suppliers and other creditors by 20 affiliate businesses of Danny's.
The judge's approval also settles Hendon's personal bankruptcy, the report added.
The Danny's affiliates filed for Chapter 11 bankruptcy in February and March 2010.
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Hendon submitted his own Chapter 11 petition to the court on July 25, listing more than $317 million in personal liabilities.
In February 2010, four creditors filed lawsuits against Hendon, who also is a developer, along with his business partners and their various companies, claiming a total debt of more than $50 million.
Dennis Naughton, general counsel of Danny's Family Cos., told the newspaper that the legal action was part of a domino effect that had started after one lender, Milwaukee-based M&I Marshall & Ilsley Bank, filed a Maricopa County Superior Court complaint, claiming nonpayment on a $13.8 million business loan.
Another, larger lawsuit was filed in March 2010 by Dallas-based Comerica Bank, contending that Hendon and 19 of his companies defaulted on a $40 million loan, with an outstanding balance of $24.7 million.
Representatives of Danny's, a major Arizona employer for more than 25 years with more than 1,000 workers, have said the effects of Arizona's weak economy have hurt retail sales at its car wash, gas-station and convenience store operations.
Since filing for reorganization, Danny's has undergone restructuring to improve its profit-making ability and long-term outlook, Hendon said.
"When this process began, we made a commitment to our employees, our creditors and our community that we would make every possible effort to weather the storm," he said in a written statement cited by the Republic.
"We have had to make some very difficult decisions over the past year and a half to honor that commitment," he added.
Hendon described the bankruptcy experience as "humbling," but said he and the company were ready to put it behind them and get back to business. "I am especially proud that Danny's is able to pay our car wash vendors and suppliers 100% of what is owed to them," he said.
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