The parent of a four-unit full-service burger bar has acquired the debt that pushed a 25-unit Applebee’s franchisee to file for bankruptcy protection in mid-October, a result of both restaurant companies being led by the same individual, Seenu Kasturi.
A bankruptcy court will decide on Nov. 17 if the Applebee’s operator, Wisconsin Apple, should be allowed to emerge from Chapter 11 supervision now that a claim against it has been voided by the purchaser of the debt, a holding company named ARC Fat Patty’s LLC, operator of the four-unit Fat Patty’s chain. That company is affiliated with ARC Group, which also owns and operates the Dicks Wings & Grill casual-dining chain.
Kasturi is the CEO of ARC Group, the parent entity of ARC Fat Patty’s and Dick’s. He is also the president of Wisconsin Apple, which was formed when another of his companies, an 18-unit Applebee’s franchisee named Louisiana Apple, bought a 29-unit operation in Wisconsin. That deal was financed by Bremer Bank National Association.
Wisconsin Apple was formed before the pandemic. After the crisis erupted, the group was losing money at a monthly run rate of $250,000 to $300,000, according to the company’s initial bankruptcy filing. Bremer demanded repayment of the principal and interest on its loan, along with financial documentation of Wisconsin Apple’s financial performance, the court documents attest.
The franchisee provided $256 million in three payments but could not generate the requested documents. Bremer took action, prompting Wisconsin Apple to pull together a bankruptcy filing literally overnight, according to the statement filed by Kasturi. He stressed in the court filing that the only alternative was to shut down the company’s restaurants and put 600 employees instantly out of work in the midst of a national health crisis.
With ARC Fat Patty’s purchase of Bremer’s note, Wisconsin Apple is asking the U.S. Bankruptcy Court for the Western District of Louisiana to dismiss the Chapter 11 case and allow the Applebee’s operator to resume its turnaround. The hearing is set for Nov. 17.
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