Diesel fuel prices put a Nashville food distributor on its knees this week, with the Chapter 11 bankruptcy protection filing of Commissary Operations Inc., a longtime Shoney's restaurants vendor.
Commissary Operations, Inc., which goes by the name of COI Food Service, said in filings this week in U.S. Bankruptcy Court in Middle Tennessee that a heavy capital investment last year, a run up in fuel prices and the demise of bankrupt restaurant Roadhouse Grill, Inc., all combined to push the company over the financial edge.
Florida-based Roadhouse had owed COI "several million" dollars and ceased all operations this year, according to the filing.
COI, which employs more than 700 people, is a major vendor for Shoney's restaurants and, in fact, was created by Shoney's executives, who bought the restaurant's commissary in 2001.
Many of them are still running COI, such as Daniel Staudt, interim president during the bankruptcy, and Lloyd Baldridge, Jr.
Dan Bigelow, the vice president of marketing for Shoney's, said he didn't expect the bankruptcy filing to affect operations of the existing restaurants. Shoney's has other food distributors, as well, officials said.
COI's lawyer, Glenn Rose, said the company would continue to operate and meet its obligations to restaurant operators after an emergency hearing in bankruptcy court Wednesday.
"The company has reached out to their customers and told them it will continue to provide good service,'' said Rose, an attorney at Harwell Howard Hyne Gabbert & Manner in Nashville. "It has a plan in place to deal with the fuel crisis."
Rose said the company has managed to come up with $22 million in bankruptcy financing from its lender, Bank of America.
COI had earlier defaulted on its loan agreement with Bank of America, which signed a new agreement with COI in March and reduced its access to credit by $2 million.
COI has 3 warehouses"Over the last few months, the debtor has started the process of reducing the number of restaurant concepts that it supplies in order to improve route profitability and adjust to increased fuel costs so that it could return to profitability," Baldridge said in a court filing.
COI said it had between $50 million and $100 million in assets and liabilities.
Top creditors include Ryder Trans Services in La Vergne, which is owed $2.3 million, New City Packing Co. in Aurora, Ill., and Coca-Cola USA in Atlanta.
COI, which serves restaurants mostly east of the Mississippi River, has three warehouses, including one in Nashville, one in Ripley, W. Va., and one in Tifton, Ga.
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