A year after the two Sneakers Sports Grille restaurants filed separate Chapter 11 bankruptcy petitions, one restaurant is already out of bankruptcy and the second expects to be soon.
Sneakers Jax Beach LLC had its Chapter 11 reorganization plan confirmed in September and Sneakers Sports Grille Pointe Meadows Inc. has a confirmation hearing scheduled for next week in U.S. Bankruptcy Court in Jacksonville.
In both cases, the reorganization plans center around reducing debt after the restaurants' business was affected by the recession that began in 2007.
Brett Mearkle, the attorney representing both restaurants, said the reorganization of the first Sneakers at the corner of First Street and Beach Boulevard in Jacksonville Beach involved reducing its debt by about $500,000.
"It was a very successful reorganization," he said.
"Baymeadows is a bit more contentious, just because of the debt load," he said.
The second Sneakers on Pointe Meadows Drive near the interchange of the Interstate 295 East Beltway and Baymeadows Road had about $6 million in debt when it filed for Chapter 11 in February 2012, court documents show. However, major creditor CenterState Bank recently appraised the property at about $3.5 million.
According to court documents, there is no dispute on the value of the property but the restaurant and the bank disagree on the structure of the debt servicing after the reorganization.
Mearkle said the two sides have a mediation scheduled today to settle that issue.
"We are very hopeful that the negotiations will become fruitful," Mearkle said.
If the two sides can't agree at the mediation, the issue will have to be decided at the reorganization plan's confirmation hearing on Feb. 22 before U.S. Bankruptcy Judge Jerry Funk.
The Baymeadows area restaurant was opened by Nicholas and Susan Pratt in 2006, five years after the first opened in Jacksonville Beach. That one was owned by Nicholas' brother Gregg.
Mearkle said the Baymeadows restaurant, built at the height of the real estate bubble, cost more to build than the Jacksonville Beach restaurant and took on more debt.
Not only did it have a large debt, but its business also suffered after the recession started in 2007, according to court documents. Revenue fell from $3.7 million in 2007 to $2.2 million in 2011. The restaurant's disclosure statement filed in court in September projected 2012 revenue to be "just shy of $2 million."
Mearkle said both restaurants will be in good shape once the debts are restructured.
"The operations are sound," he said. "Everything is in order."
(904) 356-2466