Company officials blame its lender, Milwaukee-based M&I Bank, for the expanded reorganization. Scottsdale, Ariz.-based Danny's had been current on its payments to M&I, but the banker declared the stores in "nonmonetary default," [image-nocss] mandating them to meet certain income requirements and other technical issues, according to a statement released by Danny's cited by the newspaper.
"Customer privacy laws and our corporate policy not to comment on pending litigation preclude us from commenting on this matter," M&I spokesperson Carey Allen told the paper.
.
Following M&I's complaint, which alleged that Danny's had not paid on its $13.8 million loan, other lenders followed suit, including Dallas-based Comerica Bank, which claimed Danny's owner, Danny Hendon, and 19 of his companies defaulted on a $40 million loan, the report said.
Hendon also is a partner in HB Equities, a Scottsdale development firm that is planning to build the Main Street mixed-use project in Glendale. As part of a proposed $1.2 billion bond financing plan, HB Equities was working to secure bonds from the La Paz County Industrial Development Authority. Of the total, $125 million was to be used to restructure debt and add 12 car washes to Danny's 18 locations, said the report.
Dennis Naughton, general counsel for Danny's Family Cos., said company officials still are hoping for that bond package. "A portion of the bond financing is intended to go toward refinancing the Danny's operations," he told the Business Journal. "Therefore, we are not intending to close any stores or sell any other operations."
Naughton said plans include reopening the Barcelona Restaurant in Scottsdale, which closed last June. "We are working on plans to remodel and open with a new concept," he told the paper.
Founded 25 years ago, Danny's Family Cos. has more than 2,000 employees across the Valley.
Click hereto view a CSP TV feature on Danny's.
In a prepared statement cited by the paper, Hendon said the Chapter 11 filing is a last resort to protect employees and stores while a reorganization plan is developed. "My first concern is for my employees and to the community where I have built my business over the years. Anything I can do to avoid laying people off in this tough economy, I will do. Unlike some of our creditors, we haven't received billions in bailout funds, so we have to work our way through this difficult economy."
According to the report, Danny's Family Cos. LLC and these 20 related entities filed for Chapter 11 reorganization: Danny's Commercial Properties LLC. Danny's Crossroads LLC. Danny's Gilbert Gateway LLC. Danny's San Tan LLC. Danny's Tempe LLC. Danny's Office LLC. Danny's Family Cos. LLC. Danny's Car Services LLC. Danny's Scottsdale & TB LLC. Danny's Tatum LLC. Danny's Glass LLC. Danny's Fuel LLC. 84th & Bell LLC. 3rd & Bell LLC. 83rd & Union Hills LLC. Mayo & Scottsdale Family Car Wash LLC. Twentieth & Highland LLC. Paradise Village Car Care Centre Inc. National Car Care Development Corp. Barcelona Restaurants III LLC. Barcelona Business Center LLC. Source: U.S. Bankruptcy Court and Phoenix Business Journal.
(Click here for previous CSP Daily News coverage.)
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.