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Hooters owner is in ‘wind-down’ mode

Michael Schwartz March 25, 2013 0
The Hooters at 2401 West Hundred Road. (Photo by Michael Schwartz)

The Hooters at 2401 West Hundred Road. (Photo by Michael Schwartz)

A local restaurant group turned over the keys to one of its last remaining Richmond locations and is in the process of ceasing operations.

Cornett Hospitality last week was forced to shut down its Hooters restaurant in Chester and give the property back to its landlord after the bankrupt company was barred from further use of the Hooters trademark.

The restaurant at 2401 W. Hundred Road in Chester now sits shuttered as Hooters of America works to take it over and reopen it, said Peter Barrett, an attorney with Kutack Rock representing DSRA, LLC, the landlord of the property.

“Hooters corporate is in the process of cleaning it and getting it ready to run,” Barrett said.

Topeka's Steakhouse at 1776 Parham Road (Photo by Michael Schwartz)

The Topeka’s Steakhouse at 1776 Parham Road is closed. (Photos by Michael Schwartz)

The closure follows a string of evictions in recent months from Cornett’s other locations across Richmond and Pennsylvania that couldn’t be prevented by its Chapter 11 bankruptcy filing in November.

Bruce Arkema, an attorney with DurretteCrump who represents Cornett, said the company – left without restaurants or a source of income – is considering its next move.

“For all intents and purposes, it is in wind-down,” Arkema said.

Cornett Hospitality President Phil Cornett did not return a call seeking comment.

Cornett, which at one time ran more than a dozen eateries in three states, including Hooters, Max & Erma’s and Topeka’s Steakhouse restaurants across Richmond, had sought bankruptcy protection to rework its debt and get current with its main lender and the landlord on five of its establishments, Arizona-based REIT Spirit Realty Capital.

An affiliate of Spirit Realty Capital evicted Cornett from five restaurants over the past few months, including three in Richmond, after the restaurateur fell behind on rent and loan payments.

Hooters of America has already taken over operations of Cornett’s former West Broad Street and Huguenot Road locations. Cornett’s Topeka’s location on Parham remains closed.

Its lone remaining Topeka’s location in Charlottesville is still open for business.

Cornett’s troubles mounted as it also failed to pay its franchise fees to Hooters of America, the corporation that owns the restaurant brand. Hooters sued the company in federal court, which led to the latest eviction last week.

Since its Chapter 11 filing late last year, Arkema said, Cornett had tried to work a deal to find its way back into its restaurants, but nothing materialized.

“The goal in Chapter 11 was to shed everything other than the Hooters [restaurants],” Arkema said. “But it was saddled with so much debt.”

The company’s bankruptcy filings show it had $14.7 million in debt owed to hundreds of creditors and assets of $625,000.

Phil Cornett previously told BizSense that some of its issues were tied to the closure of its two Richmond Max & Erma’s locations, which coincided with the chain filing bankruptcy in 2010.

Another insurmountable obstacle was the fact that Spirit terminated Cornett’s leases on the five locations prior to its bankruptcy, so not even a filing could prevent the eviction and consequent loss of income.

Cornett argued that retaining locations was a vital part of its reorganization attempt.

Spirit also has liens on much of the equipment and fixtures in Cornett’s other restaurants from an unpaid loan. Those assets could eventually be sold off, Arkema said.

LeClairRyan attorney Kirk Vogel represents Spirit in the Cornett matter.

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