Case 17-20526-TPA Doc 7 Filed 02/13/17 Entered 02/13/17 · PDF fileunited states bankruptcy...

UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: UNIQUE VENTURES GROUP, LLC, DEBTOR.

Bankruptcy Case No. 17-20526 Chapter 11

FIRST DAY DECLARATION

Now Comes Eric E. Bononi, the State Court Receiver, Chief Operating Officer and Chief

Restructuring Officer of the Debtor pursuant to an Order of the Court of Common Pleas of Allegheny

County, Pennsylvania, and declares as follows:

History of Business Entity

The Debtor, Unique Ventures Group, LLC (“Unique”) is a Pennsylvania Limited Liability

Company with original members consisting of Joseph Rusnock, Michael Sabatini, Jack Kuhn, Carl Baker

and Jack Nalipinsky. Unique currently owns 28 Perkins restaurants and may have an interest in ten (10)

Burger King Restaurants. See, Exhibit “A” and Exhibit “B”.

Unique originally purchased the Perkins restaurant operations for a total purchase price of

approximately $38,000,000. Spirit Funding financed the purchase transaction by acquiring fee simple title

to these restaurants and then back to the Debtor1. Unique pays Spirit $265,000.00 per month to “lease

back” these locations. After paying Spirit Funding and other monthly operating expenses, Unique paid

itself monthly accounting and management fees and pays salaries to officers and directors. Historically,

the operation of the restaurant businesses grossed approximately $38,000,000 per year. However, after

paying Spirit and certain operating expenses, Unique reportedly was netting only approximately $500,000

per year.

In an effort to expand its profits, Unique purchased the Damon’s trademark out of this bankruptcy

court. Franchisees of Damon’s are required to pay fees of approximately $75,000 per year, which should

be revenue to Unique.

1 More detail on this transaction is outlined in the Cash Collateral Motion and Order that will be filed in this case.

Case 17-20526-TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document of 4

Certain Insiders of the Debtor formed a new business entity known as Elite Restaurant Group, LP

(referred to herein as “Elite”) on March 3, 2015. Elite is a Pennsylvania limited partnership which was

originally formed to be the transferee of all of the assets of Unique. The Controller for both Unique and

Elite is Dewayne Chandler. There is significant “infighting” among the insiders of both Unique and Elite

regarding ownership interests.

Further, and as more fully set forth below, there were major issues with inaccurate bookkeeping

for these businesses, as there were two entities paying the debts of Unique. Furthermore, significant

delinquent sales and payroll tax obligations posed a dire situation for these businesses.

Receivership

On or about February 16, 2016, an action was commenced in the Court of Common Pleas of

Allegheny County, Pennsylvania, at case number GD 16-002322, seeking, among other relief, the

appointment of a Receiver for Unique. See, Exhibit “C”. By Order dated October 13, 2016, the

Honorable Christine Ward appointed, Eric E. Bononi, as the Receiver for Unique. A copy of that Order is

attached as Exhibit “D”.

Pursuant to the terms of the Receivership Order, Judge Ward substituted the Receiver for and

displaced the executive committee of Unique and the Receiver was granted full authority to exercise all

powers and authority given to the Executive committee by the amended Operating Agreement of Unique

Ventures Group, LLC dated July 31, 2015. The Receiver is the defacto corporate governance of the

Debtor.

Currently, the Receiver is in possession of all the Debtor’s assets (“Property”) and is responsible

for the operation, management, maintenance and preservation of the Property under the terms of the

Receivership Order, including taking such steps as the Receiver believes are necessary in order to

manage, operate, protect, and preserve the Property.

Upon his appointment, the Receiver began to investigate various allegations made by the rival

factions of insiders and to perform a forensic accounting of the business. Upon his appointment, the

Receiver hired Chuck Dahlman, a former IRS criminal investigator of MDO Investigations in Pittsburgh,

to investigate the various allegations, to perform forensic accounting, and to assist the Receiver in this

matter. The corporate accounting books were approximately eight months behind.


As a result of the investigation, the Receiver has determined that the so-called “Elite Restaurant

Group, LP”, does not conduct any business operations and has no revenue of its own. Instead, all of the

funds flowing through Elite were the revenue, assets and property of Unique.

Further, at the time of his appointment, the Receiver learned that Unique owed approximately

$500,000 in delinquent sales tax payments to the Pennsylvania Department of Revenue. This considerable

tax delinquency was confirmed by one of the principals of Unique during an evidentiary hearing on

October 19, 2016. What was not known to the Receiver at the time, nor disclosed to the Court by any of

the owners of Unique, was that Unique additionally owed significant delinquent tax payments to other

taxing authorities, including six-figure sales tax obligations to the State of Ohio and six-figure

employment tax obligations to the United States Treasury, for a total of approximately $1.8 million.

Based upon the Receiver’s subsequent investigation, it appears that Unique remains delinquent in the

following tax payments (excluding delinquent real estate tax obligations):

Taxing Authority Type Delinquency United States Treasury, Internal Revenue Service

Employee Withholding/Payroll Taxes

$518,910

Ohio Department of Revenue

Sales Taxes $794,442

Pennsylvania Department of Revenue

Sales Taxes $510,941

These unpaid tax obligations constitute a considerable financial challenge to Unique, and substantially

threatens its ability to continue operations. (By way of example, at the time of the Receiver’s

appointment, a principal of Unique had already negotiated with the Pennsylvania Department of Revenue

to make payments of $5,000.00 per day against the past-due balance. Payments in that amount are

unsustainable, particularly during Unique’s slower winter season. The Receiver has since negotiated a

reduced payment of $13,500.00 per week, but even this amount is difficult for Unique to meet while also

paying other operating expenses.) This Chapter 11 filing will assist in providing an amount of “breathing

room” necessary to help the reorganization of these restaurant operations most likely by a 363 Sale

Transaction or a recapitalization and Plan of Reorganization.

In addition to these priority tax obligations, Unique currently owes general accounts payable of

approximately $2,250,000.


Additionally, the ownership and structure of Unique and its related entities, such as CBK

Future’s, Inc. which may own an interest in ten Burger King locations in Ohio, and Damon’s of North

America, LLC, which owns the trademark and associated Damon’s property (but which assets were paid

for by Unique), are unclear and confused. This confusion in corporate structure further impairs the

operations of Unique and the potential sale of assets. For example, CBK Future’s, Inc. has and continues

to operate at a significant financial loss. Historically, Unique has funded those losing operations, and

CBK Ventures continues to request that it do so. However, as the entities are constituted, it does not

appear that Unique has any financial obligations to or on behalf of CBK Ventures, and should not be

funding its losses.

Finally, the Receiver has transferred the payroll the substantial employee payroll operations to

ADP for outside handling, as the payroll is approximately $15 Million yearly. This will ensure the timely

payment of all payroll taxes. The Debtor in Possession planned this filing for Monday, February 13, 2017

so that the employees were all paid current and there are no prepetition unsecured wage creditors.

Date: February 13, 2017 Respectfully submitted,

Bononi & Company, P.C. /s/ Eric E. Bononi Eric E. Bononi, Esq., CPA Court Appointed Receiver and Chief Operating Officer 20 N. Pennsylvania Avenue, Suite 201 Greensburg, PA 15601 724-972-4180 [email protected]

/s/ David K. Rudov David K. Rudov, Esq. Pa I.D. 35579 The Frick Building 437 Grant Street, Suite 1806 Pittsburgh, PA 15219 412-223-5030 [email protected] /s/ Scott M. Hare Scott M. Hare, Esq. Pa I.D. 63818 The Frick Building 437 Grant Street, Suite 1806 Pittsburgh, PA 15219 412-388-8632 [email protected] Proposed Counsel to the Debtor


mailto:[email protected]



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