A Boulder-based constellation of 108 Hardee’s restaurants has gone bankrupt.
Six LLCs that are part of Capstone Restaurant Group filed for Chapter 11 bankruptcy protection May 4 and recently closed 39 of their 147 Hardee’s locations, bankruptcy filings show.
“Together, the debtors constitute one of the largest current franchisees of Hardee’s restaurants,” said Daniel Dooley, a financial advisor to the companies, in an affidavit May 4.
The companies, headquartered at 7490 Clubhouse Road in Boulder, employ 2,250 people across eight states, most of them part time, according to their bankruptcy paperwork. The companies have $1 million to $10 million in assets but owe north of $28 million.
No company is owed more than their primary lender, Cadence Bank, which lent them $21.5 million in late 2020 and is now owed $22.1 million, plus interest. Another $6 million is owed for franchise payments and rent at the 108 stores, according to Dooley.
“As a result of the COVID-19 pandemic, franchisees system-wide have experienced declining foot traffic…resulting in declining revenue without proportionate decreases in rental obligations, debt service and other liabilities,” he claimed in his affidavit last week.
“External pressures resulting from the pandemic, including recent increases in wages and the cost of labor, shipping and food inflation, decreased availability of labor and inflation generally have driven the debtors’ cash flow issues,” their financial advisor explained.
But those financial issues may soon be solved, he said. The companies have found a buyer for their assets and hope to use the bankruptcies to expedite that sale in August.
The six companies do not own any Hardee’s restaurants in Colorado. Their locations are in Alabama, Florida, Georgia, South Carolina, Kansas, Missouri, Wyoming and Montana.
They are represented by attorneys James Markus, John Young, Matthew Faga, William Cross and Lacey Bryan with the Denver law firm Markus Williams Young & Hunsicker.