Phil Mickelson loses hunger for SouthEast Waffles

Golfer Phil Mickelson and two other businessmen have withdrawn their offer to buy a Nashville-based Waffle House franchisee out of bankruptcy, according to documents filed in U.S. Bankruptcy Court in Nashville.

Mickelson's group, called GS Acquisitions LLC, had offered $20.2 million in cash and payments over time to buy franchisee SouthEast Waffles in July. SouthEast Waffles operates 105 restaurants in four states.

Executives involved in the bid were Terry Pefanis, former chief operating officer of Franklin-based Big Idea Inc.; Steve Loy, chief executive of Scottsdale, Ariz.-based Gaylord Sports Management, which manages pro sports figures; and Mickelson, a two-time winner of the Masters golf tournament in Augusta, Ga.

The group's bid was officially withdrawn in bankruptcy court after unsecured creditors in the SouthEast Waffles bankruptcy case said they wouldn't support the plan, said Gary Murphey, SouthEast Waffles' court-appointed chief restructuring officer.

The only other bid left for the restaurants is a nearly $19 million offer from Norcross, Ga.-based parent company Waffle House Inc. Jon Waller, Waffle House's vice president and general counsel, said Tuesday that he believes creditors will agree to the proposal and confirm it in court.

While SouthEast Waffles believed GS Acquisitions' bid was a "good and viable offer," Waffle House had objected to confirmation of the plan and said it would contest the Mickelson group as a franchisee.

Waffle House said it wouldn't give GS Acquisitions expansion rights or the right to an exclusive territory, according to court documents.

Allegations, bankruptcy

SouthEast Waffles has been in Chapter 11 bankruptcy amid accusations from two banks of missing money through an alleged check-kiting scheme. SunTrust Bank has sued the franchise's former CEO James Shaub II and its former chief financial officer, Rebecca Sullivan, alleging they participated in the scheme.

Shaub has said he had no knowledge of the situation, while Sullivan has said any actions she took were part of following Shaub's orders.

When the company filed for bankruptcy last August, it had $50 million in debts and $10 million in assets, according to court records. In addition, the company had owed nearly $2.8 million in federal employment taxes.

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