Kelly-Johnston Reaches Agreement with 40 Landlords

Article excerpt

Agreements were reached Friday with approximately 40 landlords to defer almost $500,000 in lease payments for the month of May in negotiati ons between attorneys representing Kelly-Johnston Enterprises Inc. of Oklahoma City and attorneys representing landlords of several of the firm's restaurants.

The agreements were reached during a morning conference that was to have taken place during a hearing before U.S. Bankruptcy Judge Robert L. Berry.

Kelly-Johnston and the firm's subsidiaries, Chi-Chi's Food Service, Joe Kelly's Restaurants, Duff's Enterprises, and B & W Metals all entered Chapter 11 bankruptcy proceedings April 26 in U.S. Bankruptcy Court in Oklahoma City.

According to attorney Kent Meyers, the agreements will allow the firm to defer approximately $500,000 in lease payments for several of its Chi-Chi's restaurants, Kelly-Johnston leases, Joe Kelly's leases and B & W Metals.

"We're really looking for an extension to even out the cash flow," said Ray Koss, executive vice president of Kelly-Johnston.

"We expect to file for an extension on some June leases, because if we didn't, it might spread us out too thin."

Koss said Kelly-Johnston was negotiating with several landlords to reduce rent payable in the future.

Meyers said eight landlords had filed objections to the extension of time in which Kelly-Johnston could pay rent, but all eight came to an agreement with the firm to delay payment.

Another development in the firm's bankruptcy case came to light Thursday when Joe Johnston, chairman and president of Kelly-Johnston, announced an agreement had been reached with the former owners of Duff's Enterprises which would eliminate approximately one-fourth of Kelly-Johnston's debt.

The agreement, if approved by an Ohio bankruptcy judge, could erase almost $10 million to $12 million in debt for Duff's Enterprises Inc. of Oklahoma City.

The agreement involves the 26 company-owned Duff's restaurants, located throughout the United States.

Pending a ruling June 18 by Cinncinatti Bankruptcy Judge Randall J. Newsome, the settlement between Homer and Wilma Duff, the previous owners of Duff's Enterprises, will be executed, with the Duffsacquiring 11 of Kelly-Johnston's 26 restaurants.

The agreement must be approved in Ohio because of an involuntary bankruptcy petition filed there April 11 by several bank creditors of Duff's Enterprises.

Most of the restaurants the Duff family will be acquiring are located in Florida, with others located in Ohio, North Carolina and South Carolina.

The Duffs will receive the real estate leases and equipment financing that go with the facilties, Johnston said, and will also assume the guaranteed debt that is part of the Kelly-Johnston indemnification. …