Former Applebee’s Franchisees Declare Bankruptcy After $8.3 Million suit in Florida

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Looks like some former Applebee’s franchisees are in hot water. A group of companies that used to run several Applebee’s locations have filed for bankruptcy after getting hit with a hefty $8.3 million lawsuit from City National Bank of Florida.

Michael I. Goldberg, who’s overseeing this whole mess, filed for Chapter 11 bankruptcy on behalf of four companies—Louisiana Apple LLC, Mountain Apple LLC, Kentucky Apple LLC, and Oklahoma Apple LLC. All these businesses used to own Applebee’s franchises across multiple states, but now they're knee-deep in a legal battle. The bankruptcy paperwork was submitted on October 4 in the U.S. District Court for the Southern District of Florida. No word yet on exactly how much these companies are worth or how deep they are in debt, but it’s not looking pretty.

So, what led to all this drama? Well, it all started back in August when City National Bank filed a lawsuit, claiming these franchisees didn’t make their loan payments. This is where it gets a little complicated—Goldberg, the receiver, says that the companies handed over their leases and control of the Applebee’s restaurants to the franchisor, Applebee’s Franchisor LLC. And get this—the franchisor had already sued the companies in July for not paying their royalties and advertising fees. It’s a messy situation, to say the least.

Basically, these bankruptcy filings are about trying to recover what Goldberg says were fraudulent transfers and figuring out whether to sell off or run any of the restaurants that get brought back into the fold. But it’s still up in the air.

City National Bank isn’t messing around. They claim the franchisees dropped the ball on a $7.1 million loan they received through the Main Street Lending Program, a federal initiative designed to help small and medium-sized businesses during the pandemic. The franchisees defaulted on those payments this past July, and things went downhill from there. The bank even tried giving them a break by extending the deadline until May, but it wasn’t enough.

And here’s the kicker: City National Bank says these former franchisees went against their loan agreement by making a deal with Applebee’s Franchisors without the bank’s approval. Since the bank was first in line to get paid, they’re not too happy about that.

It’s a legal circus right now, with attorneys from both sides neck-deep in paperwork. As for what happens next, we’ll have to wait and see how this plays out in court.

Not exactly a "welcome to the neighborhood" situation for these Applebee’s locations, huh? Let’s hope this gets sorted out before more businesses get caught in the crossfire.