The bankruptcy judge overseeing the liquidation proceedings of the former operator of Pike Nurseries approved the $3 million settlement the now-defunct company agreed to with the private equity firm that once owned it.
Judge Mary Grace Diehl's ruling effectively ends the nearly 2-year-old case that saw the demise of the Atlanta-based, family-founded Pike Nursery Holdings.
The settlement does not affect the current Pike Nurseries chain, whose 16 metro Atlanta stores are now owned by California-based Armstrong Garden Centers.
It comes roughly three weeks after the court-appointed trustee in the case, Marcus A. Watson, reached a mediated settlement with Roark Capital Group, the firm that purchased the home gardening retailer in 2004.
In settling, both sides avoided a potentially expensive and lengthy case to see whether Roark drained the company of capital after it took it over.
It also would have been difficult for the trustee -- who represents the interests of the bankrupt company -- to prove. Roark operated Pike for three years before the bankruptcy filing, and it expanded the chain in metro Atlanta and neighboring states just as Georgia was beset by one of the worst droughts in recent history.
Still, Roark, which has $1.5 billion in assets under management and counts Cinnabon, Schlotzsky's and Moe's Southwest Grill among its holdings, opted to settle.
"While we have denied and continue to deny all wrongdoing, and believe we would have been successful in any litigation, we made a business decision to settle this matter to avoid the time burden and cost associated with potentially protracted litigation," said Stephen Aronson, Roark's managing director and general counsel.
The $3 million will be added to the $2 million the trustee already has to settle claims, said his attorney, John A. Christy.
And there may be more money coming to the estate, he said. Creditors who received payment on bills owed in the 90 days before the bankruptcy filing may have to give back that money, Christy said. How much is unclear.
Pike initially filed a Chapter 11 bankruptcy in November of 2007, seeking to reorganize its debt of $15 million. But it later converted to Chapter 7 -- liquidating its assets and ceasing operations.
Some creditors who filed claims following the Chapter 11 could get some of what they're owed in an initial disbursement Christy expects could be made as early as December.
"I think, frankly, this is an excellent outcome for creditors," Christy said. "I think people recognize it's a fair resolution of this issue."
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