Newspaper article THE JOURNAL RECORD

Dunn Revitalizes Confidence in Dairy Queen

Newspaper article THE JOURNAL RECORD

Dunn Revitalizes Confidence in Dairy Queen

Article excerpt

Queen Inc. in mid-March, C.H. Dunn, founder of the 42-year old franchise, says he is confident he can revitalize the 26-store operation and pull it out of bankruptcy.

"Since I'm back in the business," he noted, "it's not going to stand still."

Dunn has focused much of his energy since March on re-establishing morale in the community and among Dairy Queen workers:

- Dunn's Dairy Queen has paid its 20 landlords rents for March, April and May, he said. It has also worked out payment schedules for all but three of the landlords to pay back past due rent which Dunn said were not paid by former president Daniel Borgen.

- Of the five stores which closed under Borgen's control, the 3548 NW 23rd St. store reopened on April 13 and the 2920 SW 29th St. store is expected to open in about two weeks, he said.

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- The company expects to open two new stores in the Oklahoma City metropolitan area before March 1990, Dunn said.

"The utility companies and landlords are now satisfied and we have re-established credit," he said. "Businesses have a need for credit - but they have to pay the bills."

Dunn's Dairy Queen, renamed DQ Enterprises Inc. under the control of Borgen, filed for Chapter 11 reorganization in U.S. Bankruptcy Court on Jan. 4. The bankruptcy petition listed assets of about $4 million and liabilities of $2.8 million, with $1.3 million in unsecured debt. The company plans to submit a bankruptcy reorganization plan in June.

For Dunn, the most disturbing part of regaining control was the discovery of a negative cash balance in the company's operating account.

"It was represented in court that we would have $43,000 in the bank with $70,000 by the end of the week to pay the landlord's rent," Dunn said of the March 15 hearing.

"When we stepped in on the 15th, there was $43,000 in the bank - but also an overdraft on the payroll account of $33,000. By the time we sorted things out, we had a negative cash balance of about $9,000."

Borgen's biggest difficulty was gaining trust from creditors, said John Montazzoli, attorney for Borgen during bankruptcy proceedings.

"Creditors that dealt with Dunn for 20 years felt more comfortable with him," he said. "He had a longstanding friendship with vendors and landlords."

A new marketing program launched last month has helped revitalize sales for the franchise, which operates primarily in the Oklahoma City Centralplex. DQ Enterprises ceased advertising for about three months under Borgen's ownership, Dunn said. …

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