With at least 25 active mechanics lien claims worth a combined $3 million placed against four different locations, entertainment restaurant chain Punch Bowl Social declared Chapter 11 bankruptcy on December 21, 2020 with the US Bankruptcy Court for the District of Delaware.
The mechanics lien claims (unpaid construction work claims) were filed before and after the COVID-19 pandemic beleaguered the bowling, arcade, and restaurant chain that once operated 18 locations across the US.
The Denver-based “eatertainment” chain continued to struggle amid the pandemic, permanently shutting down four of their locations. As of December 2020, their bankruptcy filing claims all remaining venues will be closed until further notice.
The filing elaborates: “Unfortunately, because of restrictions limiting the number of patrons at each venue, as well as the public’s uneasiness of going out to eat or drink in public during a pandemic, each of those venues was losing money on a daily basis.”
“The Debtors have determined that, in light of the need to preserve cash during these Chapter 11 bankruptcy cases, the Debtors are closing all of the remaining venues effective immediately,” the filing stated.
At the time of their bankruptcy filing, Punch Bowl Social Reported the following estimates:
- 200-900 estimated creditors
- $10,000,001 – $50 million in estimated liabilities
- $10,000,001 – $50 million in estimated assets
In March, restaurant chain Cracker Barrel opted to shore up their own liquidity after investing $140 million in a stake of Punch Bowl Social in 2019.
Punch Bowl Social’s CEO and founder Robert Thompson resigned in August of 2020, telling Nation’s Restaurant News that he planned to “form an incubator holding company that will focus on building projects geared towards Millennials and Gen Z.”
What is Chapter 11 bankruptcy?
A Chapter 11 bankruptcy filing provides for the reorganization of a debtor’s business affairs, assets, and debts. When filing for Chapter 11 relief, a debtor must present a plan of reorganization, which then must be approved by the creditors and an overseeing trustee. While the debts are restricted by the trustee, the business can continue operating. However, all debts must be paid back to creditors via future earnings.
25 mechanics liens worth $3M placed against four Punch Bowl Social locations
The 25 active mechanics lien claims combine for a total of $3,006,030.86 in unpaid work to 23 different contractors.
Current Punch Bowl Social locations subject to the lien claims are in Austin, Dallas, Miami, and Phoenix.
Of the 25 active liens, the earliest known unpaid work claim was filed on January 6, 2020 against Punch Bowl Social’s Dallas location, according to a filing with the Tarrant County clerk’s office. The claim, valued at $51,737.20, was filed by subcontractor McCloskey Mechanical directly against Punch Bowl Social.
The most recent lien was filed on October 8, 2020 at the Austin location by subcontractor Performance Commercial Glass. The lien, worth $12,974.06, was filed against general contractor Gallant Construction Company, according to the Travis County clerk’s office.
The Austin location is also subject to the largest lien of the 25 claims at $972,851.61 from Gallant Construction Company against Punch Bowl Social. The unpaid work claim was filed on May 13, 2020, according to the Travis County clerk’s office.
Punch Bowl Social lists 30 largest unsecured claims in bankruptcy filing
According to the bankruptcy filing, Punch Bowl Social holds a $10,069,144.44 Paycheck Protection Program loan with JPMorgan Chase, which is listed as the largest of 30 unsecured claims listed in the filing.
The filing only listed the 30 largest unsecured claims, and did not include any secured claims.
The majority of Punch Bowl Social’s remaining creditors with unsecured claims listed in the filing are leaseholders of their locations throughout the country.