Magic Brands LLC, parent of Fuddruckers and Koo Koo Roo, has announced that it has received bankruptcy court approval to reject the 2007 agreements related to the interim management and contemplated sale of its Minnesota restaurants to R.J.
"We are pleased with the court's ruling and its recognition of the fact that the Minnesota restaurants are and always have been corporate-owned locations, not franchises," said CEO Peter Large. "This was a unique situation that does not affect our franchised restaurants. Magic Brands continues to be committed to and supportive of its relationship with franchisees."
The ruling relates to a transaction initiated in 2007 that ultimately never closed. In January 2007, Magic Brands and R.J. Management entered into a letter of intent for the sale of six restaurants in Minnesota to be consummated in two phases. However, as the bankruptcy court found, the transaction never closed and R.J. Management was not a franchisee in Minnesota or an owner of the assets. Instead, the court recognized that R.J. Management was operating the restaurants under a management agreement.
The ruling should facilitate Magic Brands' efforts to maximize value for all creditors by including two of the Minnesota locations in the sale of its assets.
The company filed for bankruptcy protection April 21. Two days later, the company received court approval for its bankruptcy filing, enabling it to move forward with plans to sell approximately 62 of its restaurants to Tavistock Group.
