By: Daniel Hart and Salene Mazur Kraemer
On September 11, 2015, the Please Touch Museum in Philadelphia filed for Chapter 11 bankruptcy (Bankruptcy Case no. 15-16558) in the United States Bankruptcy Court for Western District of Pennsylvania, thus triggering an automatic stay or injunction pursuant to 11 U.S.C. 362 of the Bankruptcy Code that halts actions by creditors, with certain exceptions, to collect debts from the debtor who has declared bankruptcy. “Don’t Touch the Debtor”.
The museum intends to remain as a debtor-in-possession and continue operating during the pendency of the Chapter 11 Case. The museum’s mission is to enrich the lives of children by creating learning opportunities through play. It aims to achieve this mission by creating meaningful interactive play-based experiences within the museum and beyond its walls for all young children and their families. The museum has been nationally recognized for its lasting impact.
The museum filed for protection under Chapter 11 bankruptcy because it borrowed more money then it could pay back to renovate a new home in Fairmount Park’s Memorial Hall. Sources say the bankruptcy filing has two main objectives: (i) to shed the majority of the $60 million it owes holders of its debt, and (ii) to negotiate a deal whereby the museum turns over maintenance and repairs of Memorial Hall to the city, which owns it.
The museum owes about half of its debts to a group of bondholders. It formulated a plan to pay back these bondholders about $11.5 million of the $60 million debt. Filing for bankruptcy was a tactic used to get this bondholder group to agree to the plan. Also, the museum is launching a $10 million fund-raising rescue plan. In addition to paying off the debt, the museum intends to use the money to pay professional fees associated with the bankruptcy and to make some exhibit upgrades. It remains to be seen whether this strategy will solve the museum’s problems.
The entities in charge of the 1818 Market Street location for the Marathon Grill Philadelphia restaurant chain, 1818 Market Street Marathon Grill, Inc. and its general partner 1818 Market Street Marathon Grill Associates , filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of Pennsylvania (Philadelphia) on October 9, 2013. 1818 Market Street Marathon Grill, Inc. is the corporate entity for the 1818 Market Street location and has been assigned to the Honorable Judge Magdeline D. Coleman under case number 2:13-bk-18861. 1818 Market Street Marathon Grill Associates, the partnership in charge of the location filed separately and has been assigned to the Honorable Judge Eric L. Frank under case number 2:13-bk-18863. (Please click the hyperlinks for docket summaries). Motions for Joint Administration of both cases were filed by each entity on October 9, 2013. The debtors listed the same creditors with the exception that 1818 Market Street Marathon Grill, Inc. also lists NNN 1818 Market, LLC, the building management company in charge of 1818 Market St.
The Marathon Grill began as a 10-seat hamburger restaurant in Northeast Philadelphia in 1984. It eventually grew into a six location restaurant chain before shrinking back down to operating three locations at 1818 Market St., 19th & Spruce St., and 16th & Sansom St. The bankruptcies affect the 1818 Market St. location, the largest of the three restaurants. The filings were made in response to learning that the landlord intended to take possession of the restaurant space over an ongoing dispute over unpaid back rent and fees of approximately $540,000.
1818 Market Street Marathon Grill Associates declared assets between $500,000 and $1 million with liabilities between $100,000 and $500,000. 1818 Market Street Marathon Grill, Inc. declared assets between $50,000 and $100,000 with liabilities between $1 and $10 million. The debtors entities are represented by Aris J. Karalis and Robert W. Seitzer of Maschmeyer Karalis P.C. The bankruptcies do not affect the other Marathon Grill locations and the debtors have pledged that the 1818 Market St. location will remain open during the bankruptcy proceedings.
Salene: In my younger years as a lawyer at Weir & Partners LLP in Philadelphia (2002-2004), I used to grab many late dinners at the Marathon Grill location at Sansom Street. It was hip, for sure. What is the formula for sustainability in the restaurant industry?