On what date was S&Q Shack placed into involuntary bankruptcy, which involved an officer of Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
On March 19, 2009, a creditor, BV Retail, LLC ("BVR"), filed an involuntary petition against S&Q Shack for liquidation under Chapter 7 of the U.S. Bankruptcy Code. In re The S&Q Shack, LLC, No. 09-67151 (N.D. Georgia Atlanta Division 2009). Daryl Dollinger, an officer of ours, was an officer of S&Q Shack. BVR claimed that S&Q Shack owed BVR certain money in connection with a lease between S&Q Shack and BVR (the "Lease"). On April 13, 2009, S&Q Shack answered the petition and denied BVR allegations that (i) BVR is eligible to file the involuntary petition and (ii) S&Q Shack is not paying debts to BVR that are not subject to a bona fide dispute as to liability or amount. S&Q Shack also asserted in the answer that BVR lacked standing to file the involuntary petition because there are more than 12 creditors with claims that are not contingent or subject to bona fide dispute. By order dated August 27, 2010, S&Q Shack was placed into involuntary bankruptcy. S&Q Shack has cooperated with the U.S. Bankruptcy Trustee in the production of financial and other requested information.
Source: Item 4 — BANKRUPTCY (FDD page 11)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, S&Q Shack was placed into involuntary bankruptcy on August 27, 2010. This bankruptcy involved Daryl Dollinger, who was an officer of Cinnaholic at the time and also an officer of S&Q Shack. The involuntary petition was initially filed on March 19, 2009, by BV Retail, LLC (BVR), a creditor claiming that S&Q Shack owed them money related to a lease. S&Q Shack initially denied these allegations.
The document indicates that BVR claimed S&Q Shack owed them money related to a lease. S&Q Shack contested the petition, arguing that BVR was not eligible to file it and that S&Q Shack was not failing to pay debts that were not subject to a legitimate dispute. S&Q Shack also claimed that BVR lacked standing because there were more than 12 creditors with claims not contingent or subject to bona fide dispute.
This bankruptcy and related litigation could be material to prospective Cinnaholic franchisees as it involves a current officer and past business dealings. Franchisees may want to further investigate the details of the bankruptcy, the litigation, and the involvement of Cinnaholic's officer to fully understand any potential risks or liabilities. Understanding the resolution and settlement reached in 2016 and 2017 may also provide additional comfort.