Who filed the involuntary petition against S&Q Shack, 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 the 2025 Cinnaholic FDD, BV Retail, LLC ("BVR") filed an involuntary petition against S&Q Shack for liquidation under Chapter 7 of the U.S. Bankruptcy Code on March 19, 2009. The case was In re The S&Q Shack, LLC, No. 09-67151 (N.D. Georgia Atlanta Division 2009). Daryl Dollinger, who was an officer of Cinnaholic, also held a position as an officer of S&Q Shack. BVR's claim was based on S&Q Shack owing BVR money related to a lease agreement.
S&Q Shack responded to the petition on April 13, 2009, denying BVR's eligibility to file the petition and disputing the debt. S&Q Shack argued that BVR lacked standing because there were more than 12 creditors with claims not subject to dispute. However, on August 27, 2010, the court placed S&Q Shack into involuntary bankruptcy, and S&Q Shack cooperated with the U.S. Bankruptcy Trustee by providing financial and other requested information.
This bankruptcy case is also mentioned in Item 3, Litigation, where it is noted that in 2012, the United States Bankruptcy Trustee sued certain affiliates, officers, and directors of Cinnaholic, including Daryl Dollinger, alleging fraudulent transfers related to the sale of S&Q Shack. The lawsuit claimed that Dollinger and others caused or benefited from the distribution of proceeds from the sale of S&Q assets, leaving no assets to pay S&Q's creditors. This litigation was eventually settled in 2017 after mediation.