A franchisee of frozen yogurt chain Pinkberry that owns several franchise locations around the Washington, DC area has filed Chapter 7 bankruptcy.
According to the Washington Business Journal, Pinkberry Mid-Atlantic LLC listed debts totaling more than $1.2 million, with assets of more than $820,000, in its bankruptcy filing. The franchisee is controlled by Stavros Roberts who, along with attorney John Goetz, filed the Chapter 7 bankruptcy petition on December 26 in the U.S. Bankruptcy Court for the Eastern District of Virginia.
Pinkberry Mid-Atlantic currently operates locations in Georgetown, Dupont Circle, Arlington, Fairfax, Tysons Corner, Gainesville and National Harbor. The franchisee’s store in Leesburg closed earlier in 2014.
Unlike a Chapter 11 bankruptcy, which allows businesses to restructure their debt and establish a repayment plan with their creditors, the Chapter 7 bankruptcy petition seeks the liquidation of Pinkberry Mid-Atlantic.
“Chapter 7 for a business is unusual, because most businesses that file bankruptcy want to continue in business,” says Charles Huber of the Law Office of Charles Huber. “A business that files chapter 7 bankruptcy is not entitled to a discharge of its debts, only individuals can get a chapter 7 discharge.”
Goetz told the Washington Business Journal that it’s unclear whether or not the LLC’s locations will remain open after its liquidation. In one potential outcome, the corporate Pinkberry franchiser, based in California, could take over the stores — however, Pinkberry executives declined to comment on the matter.
The franchisee’s creditors will meet sometime next month to discuss a plan of action for the Chapter 7 bankruptcy, which will result in the franchisee’s debts being dissolved in its liquidation. Pinkberry Mid-Atlantic’s largest creditor is BBandT Corp. — the franchisee owes the bank some $500,000. The franchisee also owes nearly $100,000 in back taxes to Arlington County and the state of Virginia. Other creditors include various law firms, utilities providers like Pepco, Dominion Virginia Power and D.C. Water and food service provider Sysco.
Roberts has declined to comment on the bankruptcy through his attorney.
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