What are the consequences if a Baya Bar Developer files for bankruptcy?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
7.1 Default and Automatic Termination. Developer shall be deemed to be in material default under this Agreement, and all rights granted herein shall automatically terminate without notice to Developer, if Developer shall become insolvent or makes a general assignment for the benefit of creditors; or if Developer files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admits in writing his or her inability to pay debts when due; or if Developer is adjudicated a bankrupt or insolvent in proceedings filed against Developer under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver of Developer or other custodian for Developer's business or assets is filed and consented to by Developer; or if a receiver or other custodian (permanent or temporary) of Developer's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against Developer; or if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); or if Developer is dissolved; or if execution is levied against Developer's business or property; or if suit to foreclose any lien or mortgage against any of Developer's Baya Bar outlet premises or equipment is instituted against Developer and not dismissed within thirty (30) days.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if a Developer files a voluntary petition under any section or chapter of federal bankruptcy law, it constitutes a material default under the agreement. This results in an automatic termination of all rights granted to the Developer without any prior notice.
Specifically, the agreement terminates automatically if the Developer becomes insolvent, makes an assignment for the benefit of creditors, admits in writing their inability to pay debts when due, or is adjudicated bankrupt or insolvent in proceedings filed against them. Similar consequences arise if the Developer consents to the appointment of a receiver for their business or assets, or if such a receiver is appointed by a court. The same holds true if proceedings for a composition with creditors are instituted by or against the Developer under any state or federal law.
Additionally, a final judgment remaining unsatisfied for thirty days or longer, the dissolution of the Developer, execution levied against the Developer's business or property, or the institution of a suit to foreclose any lien or mortgage against the Baya Bar outlet premises or equipment (not dismissed within thirty days) also lead to automatic termination. This means a Baya Bar developer needs to maintain financial solvency to avoid losing their development rights.