Papa John's franchise owner declares bankruptcy

5:55 PM, Sep 29, 2011   |    comments
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The franchisee, PJCOMN Acquisitions, Inc. owns at least 40 locations in Colorado, according to the lawyer representing the group.

In bankruptcy court this week, PJCOMN's assets were frozen, including a payroll account meant to pay employees.

"I'm wondering if I can come into work tomorrow," said Papa John's General Manager Brad Simoneau. "Because the way I see it, if they've got all their bank accounts frozen where they can't pay us our paychecks how are they going to pay their bills too?"

Simoneau's Papa John's store at Ken Caryl and Simms in Southwest Jefferson County received an eviction notice this week from the landlord.

"Our paychecks are no good," said delivery driver Bill Bradley. "Everybody's pretty scared about it because no one wants to lose their jobs."

The franchisee's Miami-based attorney, Robert Zarco, said employees should be paid this week.

"We are waiting from an order from the bankruptcy judge," he said, which could come at "any moment."

"Our client, PJCOMN, which is the current operator of those restaurants is terribly sorry, very very mad about the position, the precarious position that this situation has created for these families."

Zarco also represents PJCOMN in a complicated lawsuit against Papa John's International, the parent company.

The lawsuit claims Papa John's International failed to disclose significant liabilities between the previous owner of the restaurants in Colorado and Minnesota.

In addition, the PJCOMN is facing litigation from more than 3,000 delivery drivers for paying wages that are not up to par.

Papa John's International called the franchisee's lawsuit against the company frivolous.

"We think the lawsuit filed against us was an act of desperation with these guys," said Papa John's International Senior Vice President Chris Sternberg. "We firmly believe both [Colorado's and Minnesota's markets are viable, and in the hands of the right operator can be successful."

Not all papa John's locations in Colorado and Minnesota are owned by PJCOMN.

According to the bankruptcy filing, franchisee PJCOMN, Acquisitions Inc. filed for Chapter 11 bankruptcy back in February.

The owners estimated on the bankruptcy-filing document they owe money to more than 200 creditors or as many as 999 creditors. The creditors are companies from all over the country.
On the filing, the group selected they owe somewhere in the neighborhood of $10 million to $50 million to these creditors in total.


Of the 72 restaurants owned, 40 of them are in Colorado. The employees of one local Papa John's restaurant were notified on Tuesday of the bankruptcy filing. Even though the note says that the purpose of the bankruptcy is to keep the company going while the parent company reorganizes its finances and manages its debt, employees are still worried.

The note posted on the door of the Papa John's does address this issue.

"Unfortunately, because of the actions of a receiver and some confusion it caused with our banks, the payroll checks that went out [Tuesday] may not have been honored. This was not the company's fault, and we are working to remedy the confusion and restore the paycheck funding by the end of this week."

The rest of the posted note goes on to say that the bankruptcy filing should have no other affect on their individual operations.

It is unknown at this time when those employees will get paid for their work.

(KUSA-TV © 2011 Multimedia Holdings Corporation)

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