On what date was RBI placed into involuntary bankruptcy, which involved an officer of Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
On April 1, 2009, a creditor, BVR, also filed an involuntary petition against RBI for liquidation under Chapter 7 of the U.S. Bankruptcy Code. In re Raving Brands, Inc., No. 09-68410 (N.D. Georgia Atlanta Division 2009). Daryl Dollinger, an officer of ours, was an officer of RBI. BVR claimed that RBI owed BVR certain money in connection with the Lease and a Consent Judgment that BVR obtained against RBI. The Consent Judgment entered against RBI related to S&Q Shack's obligations under the Lease which RBI guaranteed and signed a promissory note related to certain amounts due under the Lease. On April 27, 2009, RBI answered the petition and denied BVR allegations that RBI was not paying debts to BVR that are not subject to a bona fide dispute as to liability or amount. RBI also asserted in the answer that the petition should be dismissed because the petition seeks to invoke involuntary bankruptcy against a putative debtor that lacks any assets which could be liquidated in a Chapter 7 case. By order dated August 20, 2010, RBI was placed into involuntary bankruptcy.
After the amount of the claim was adjudicated by the bankruptcy court, the Bankrupt Estate, the trustee, BV Retail and all of the defendants successfully mediated the claims to a global resolution in November 2016. The parties subsequently executed a settlement agreement and an order approving settlement and dismissing this proceeding followed in 2017. This led to the termination of the bankruptcies in question.
Source: Item 4 — BANKRUPTCY (FDD page 11)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Raving Brands, Inc. (RBI), an entity where a Cinnaholic officer was also an officer, was placed into involuntary bankruptcy on August 20, 2010. This bankruptcy stemmed from an involuntary petition filed by a creditor, BVR, on April 1, 2009, alleging that RBI owed BVR money related to a lease and a Consent Judgment. RBI initially denied these allegations, asserting that it had no assets to liquidate and that the debts were subject to a bona fide dispute.
The claim against RBI was later adjudicated by the bankruptcy court, leading to a mediated global resolution involving the Bankrupt Estate, the trustee, BV Retail, and all defendants in November 2016. Subsequently, a settlement agreement was executed, and an order approving the settlement and dismissing the proceeding followed in 2017, which resulted in the termination of the bankruptcy case.
For a prospective Cinnaholic franchisee, this information indicates that individuals associated with Cinnaholic have been involved in prior bankruptcy proceedings. While the matter was eventually resolved, it highlights the importance of thoroughly investigating the background and financial history of the franchisor's leadership. It is essential to assess whether past business ventures could pose any risks or liabilities for the franchise system.