Reorganized Perkins & Marie Callender looks to buy real estate company

By Jim Witters

Wilmington, Del., Nov. 18 - The reorganized Perkins & Marie Callender's Inc. is seeking court approval to buy 100% interest in P&MC Real Estate Holding, LLC, a non-debtor affiliate, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

A sale agreement was struck on Nov. 17 among Perkins & Marie Callender's Inc., its debtor affiliates, Castle Harlan, Inc., and the official committee of unsecured creditors that would settle about $16.86 million of claims, the documents state.

The purchase price is $1.17 million.

The sale also would give the reorganized company ownership of the building it leases at 6390 Beach Boulevard, Westminster, CA.

"Through the agreement, the debtors and the committee will be able to completely and finally resolve the claims and preserve and maximize value by avoiding the substantial costs and expenses necessarily associated with the debtors' estates litigating the claims and the surrounding issues," the documents state.

"Equally as important, the agreement will allow the reorganized debtors to acquire 100% of the (real estate holding company's) interests and thereby own the Westminster location, a prospective and anticipated profit-generating location, without the financial burdens and obligations attendant to the sublease and without subjecting the debtors' estates to a rejection damages claim," the documents added.

A hearing on the agreement is scheduled for 4 p.m. ET on Nov. 22.

Castle Harlan owns or controls substantially all of the equity interests in Perkins holding company. The holding company, in turn, holds all of the ownership interests in the real estate holding company.

The real estate holding company holds 100% interest in the Westminster property, where debtor Marie Callender Pie Shops, Inc. holds a sublease.

Claims being settled

The real estate holding company filed a proof of claim in August in the amount of $320,440 for unpaid prepetition rent and costs under the sublease.

In addition, Castle Harlan filed a proof of claim in August in the amount of $3.832 million for management fees due under a 1999 agreement, and Castle Harlan filed a proof of claim in August in the amount of $12.44 million for management fees due under a 2005 agreement.

P&MC's Holding LLC filed a proof of claim in August in the amount of $264,423 for accrued unpaid board of director fees.

"After extensive good faith and arms-length negotiations between the parties, in order to avoid the delay, uncertainty and expense of continuing litigation, the parties have determined to resolve their disputes pursuant to the terms, covenants and conditions of the agreement," court documents state.

The debtors "are presently targeting" a Nov. 30 effective date.

Perkins & Marie is a Memphis-based operator and franchiser of full-service restaurants. The company filed for bankruptcy on June 13 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 11-11795.

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