Judge decides which of Garces' restaurant holdings are in play for bankruptcy proceeding

Steve Tawa
May 23, 2018 - 8:40 am
Chef Jose Garces in his Olon restaurant.

Hadas Kuznits | KYW Newsradio

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PHILADELPHIA (KYW Newsradio) -- A federal bankruptcy judge has decided which Jose Garces restaurants will be in play, as the famed chef tries to move a step closer to putting his portfolio of restaurants and catering unit on the auction block. But his partners, who feel jilted, opposed the move. 

Lawyers for Garces' early investors sought to prevent him from taking successful Philadelphia restaurants, including Amada, Tinto, Village Whiskey and Buena Onda, into bankrupcy. A court-ordered carve-out would certainly affect the final price for his multi-restaurant operation. Now, federal Judge Jerrold Poslusny has ruled only Buena Onda, a museum district taqueria, will be pulled out of Chapter 11.

Spinner Family Holdings and food purveyor Jim Sorkin contend Garces "rigged" the outcome of voting in a meeting with them in favor of the bankruptcy filings. While Garces would reduce his massive debts, they stand to lose millions of dollars.

They have a rival motion, asking a Common Pleas judge in Philadelphia to remove Garces and appoint a receiver to run his restaurants.

Investment banker Jeff Manning testified that Garces offered his partners a path to avoid bankruptcy, when restaurant chain operator Ballard Brands originally offered more than $14 million. Manning says the Spinners and Sorkin would have received nearly $5 million, but they rejected that offer.

Now, bankruptcy brings bargain prices. 

Garces, in a written statement, said in part, the ruling "confirms claims made by these investors completely false." He continued, "The fact is that I have always -- in good times and challenging -- put our employees and the success of our entire enterprise at the forefront. ... With this victory, we can get back to focusing on what we do best -- providing excellent food and hospitality to our loyal customers." 

Ballard, the so-called "stalking-horse" leading bidder -- the entity with the initial bid on the assets of Garces' bankrupt company -- cut the offer sheet to about $6 million. However, at least five other investors could place bids when it goes to auction in late June.