Bankrupt Waffle House franchisee draws bids

SouthEast Waffles, the largest independent franchisee of Waffle House restaurants, has become a hot item as it tries to exit bankruptcy court with a new owner.

Masters golf champion Phil Mickelson, a Tennessee restaurateur and the parent company of the Waffle House chain are all part of competing bids for Nashville-based franchisee and its 105 restaurants. SouthEast Waffles, which has outlets in Tennessee, Alabama, Mississippi and Kentucky, filed for bankruptcy protection in August 2008.

Waffle House, the Norcross-based franchisor of the chain, made a $21.4 million bid last month for SouthEast Waffles, according to court filings.

GS Acquisitions, a company that includes Mickelson as a principal, followed with a $20.2 million bid. Other GS principals include Steve Loy, CEO of Gaylord Sports Management, and Terry Pefanis, former chief operating officer of Big Idea, best known for its VeggieTales series.

Late last week, MNM Waffles submitted a $24.7 million bid. The CEO for the newly formed MNM Waffles is Maria Tangredi. Her husband and son are executives in M. Tangredi’s Restaurants, a Nashville restaurant firm that filed earlier this year for its own bankruptcy proceedings, according to NashvillePost.com.

The three bids are scheduled to be reviewed next week by the U.S. Bankruptcy Court for the Middle District of Tennessee, but it could take months to determine what happens with SouthEast Waffles.

The amount of the bid is only one factor, said Scott Riddle, an Atlanta bankruptcy attorney. The bidders have proposed making payments over several years.

The court and creditors will want to know if the bidders have sound financial backing and can successfully run the restaurants, Riddle said.

“I want to know who they are and I want to know what kind of experience they have,” he said. “It’s not just looking at the money.”

Waffle House declined to comment on the other bids but company spokesman Pat Warner said Waffle House thinks it has the best plan. The first Waffle House opened more than 50 years ago in Avondale Estates.

“We’ve been running Waffle House restaurants since 1955,” Warner said. “We think we do a pretty good job of it.”

Waffle House has 818 company owned stores in the chain of 1,571 restaurants. Earlier this year, Waffle House also bought Northlake Foods, a Tampa franchisee that had filed for bankruptcy. Its restaurants are now part of East Coast Waffles, a wholly owned subsidiary of Waffle House that has 111 outlets.

A court-appointed examiner found that Northlake’s losses were unrelated to the Waffle House business, but instead were caused by loans and advances made to other businesses for Northlake’s largest shareholder.

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