Flatiron Crossing landlord objects to Old Chicago parent’s bankruptcy filing

NASHVILLE — A group of commercial landlords, including the owner of Broomfield’s Flatiron Crossing and Boulder’s Twenty Ninth Street, object to a recent motion by the bankrupt parent company of the Boulder-born Old Chicago Pizza & Taproom restaurant chain that would allow the firm to reject leases while maintaining occupancy indefinitely. 

Real estate investment trust The Macerich Co. joined six other landlords — owners of 11 total restaurant locations — in objecting to CraftWorks Holdings LLC’s lease-rejection motion, which would pause rent payments for the Nashville-based operator of Old Chicago, Gordon Biersch Brewery Restaurant, Logan’s Roadhouse and Rock Bottom Restaurant & Brewery chains.

CraftWorks filed for Chapter 11 bankruptcy protection in March in U.S. Bankruptcy Court in Delaware. 

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In early March, the firm began shuttering restaurant locations across the country, including the Old Chicago Longmont store. Since then, the COVID-19 outbreak has forced the closure — in some cases temporary, in others permanent — of all 261 CraftWorks-owned restaurants, including the Old Chicago restaurant in Greeley.

As a result of the crisis, the company has “laid off nearly all of its approximately 18,000 employees other than a small group of less than approximately 25 employees to help preserve, maintain and secure its assets during the shut-down period,” according to court documents filed last week by CraftWorks.

CraftWorks leaders “are focused on pressing pause on their operations in an attempt to preserve as much value as possible in the hopes of restarting their operations at some point in the future,” the filing said. The “plan is to cut remaining operating and administrative expenses to the bare minimum.”

One of the major expenses for a restaurant ownership group is rent. CraftWorks has petitioned the bankruptcy court to allow the firm to reject leases and halt payments to landlords. The motion does not specify when the restaurant operators would have to clear out of the leased spaces and hand over their keys.

“Landlords do not challenge the debtors’ right to reject the leases pursuant to the debtors’ ‘business judgment.’ Nor do landlords contest that the debtors may have a sound business reason for the rejection of the leases or that the court has the power to grant that rejection,” attorneys for Macerich and the other landlords wrote in a Thursday filing. “Rather, landlords object to the debtors being permitted to reject the leases while it is still occupying the premises.”

The landlords want the opportunity to release the properties as soon as possible.

“The debtors’ request that the surrender date for real property leases become effective ‘as of the date on which the debtors deliver possession to the landlord and return the keys, security codes and related information needed to operate any systems in the subject premises to the applicable landlord,’” the landlord’s objection said. “However, it is unclear how the debtors intend to convey possession of the premises to the landlords, and given the current public health crisis caused by COVID-19.”

CraftWorks has also failed to indicate whether any additional parties may have claims on property within the restaurants that may be left behind whenever the keys are eventually handed over to the landlords, according to court documents.

“This will leave the landlords uncertain as to whether it can use or dispose of any property remaining on the premises,” the objection said. “… The abandonment of property can result in significant costs to landlords as a debtor often leaves its vacated space cluttered with inventory, supplies and [furniture, fixtures, and equipment.] This leaves the landlords with the task of cleaning up the premises, removing and/or storing remaining property, and especially critical here, potentially dealing with any third-party security interests that may exist with respect to the abandoned property.”

The deadline for objections was Thursday afternoon and a hearing is set for April 17.