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By Daniel J. Sernovitz – Senior Staff Reporter, Washington Business Journal

Dec 26, 2024

Updated Dec 26, 2024 9:09am EST

 

The founders of breakfast sandwich chain the Cracked Eggery allegedly mismanaged the business and only sought bankruptcy protection to delay efforts by a minority owner to force the company to address its deficiencies, according to a motion filed to dismiss the bankruptcy case.

 

The founders failed to pay D.C. sales and use taxes, took on high-interest loans and lacked internal structures to control expenses and boost revenues, according to attorneys for the Donald H. Patterson, III Revocable Trust, which filed a motion in the U.S. Bankruptcy Court for D.C. on Dec. 19 to have the company's Chapter 11 case dismissed.

 

"This Bankruptcy Case is not about implementing a restructuring plan that provides an opportunity to start over," according to the motion to dismiss, signed by Jeremy S. Williams, an attorney with Richmond-based Kutak Rock LLP, who is representing the trust. "Instead, it is a litigation tactic."

 

While its restaurants in Cleveland Park and Shaw remain open, the Cracked Eggery filed for bankruptcy protection on Dec. 5, listing estimated assets of less than $50,000 and liabilities of more than $1 million. It has not yet filed more detailed financial statements, and lawyers for the company have been granted an extension until Dec. 30 to do so. In its petition, the company listed the Patterson trust as its largest unsecured creditor, with a disputed claim of nearly $1.3 million.

 

The company has not yet filed a response to the motion to dismiss, and representatives for the Cracked Eggery, co-founded by Mike Tabb, AJ Zarinsky and Ross Brickelmaier, could not be reached for comment.

 

The bankruptcy court has scheduled a hearing for Jan. 15 to consider whether to dismiss the case. [rest of article may be accessed through DCPL online resources, free for DC Public Library card holders. If you do not have a valid DC Public Library card, you can apply for one online and use it immediately.

 

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Posted by:

Peggy Robin

Cleveland Park Listserv Moderator

 

-- from original message --

 

By Prince Of Petworth

Published December 20, 2024 at 1:00PM

 

From a press release:

 

“Cracked Eggery, Inc., the parent company of a small chain of fast causal restaurants under the same name, has announced that it filed for Chapter 11 bankruptcy protection on December 5, 2024 to address financial challenges and restructure its debt obligations. The company’s filing of Chapter 11 is a strategic decision that will secure a sustainable future for the business while addressing its outstanding obligations to creditors.

 

The bankruptcy filing does not include the group’s two flagship eateries, located in the vibrant neighborhoods of Shaw and Cleveland Park [3420 Connecticut Ave, NW], both of which remain operational and unaffected by the filing. These two establishments are separate entities and will continue to serve their loyal patrons.

 

Customers of the Shaw and Cleveland Park locations as well as those ordering online, can be assured that these establishments will remain open and fully operational throughout this process. Rewards and promotions will continue to be honored without interruption.

 

“This decision was not made lightly, but it is a necessary step to address financial pressures and ensure the long-term viability of our brand,” said Mike Tabb, Co-Founder of Cracked Eggery, Inc. “We remain committed to maintaining the exceptional dining experiences our customers have come to expect and are confident that this restructuring will allow us to emerge stronger than ever.”

 

The management team is actively working with financial advisors and legal counsel to develop a restructuring plan that addresses the concerns of creditors, employees, and stakeholders.

 

Cracked Eggery would like to express gratitude to its customers, employees, and partners for their ongoing support during this challenging time.”