After filing for protection under the bankruptcy laws in Tampa on Wednesday, the owner of a half-dozen Johnny Leverock's Seafood Houses got court approval Thursday to borrow money to meet its payroll.
Gold Coast Restaurants Inc. of Tampa operates under the Leverock's name in Madeira Beach, Clearwater Beach, Bradenton, Ellenton, Sarasota and Fort Myers. A seventh restaurant, in New Port Richey, has been closed since a fire a year ago. An eighth in Pinellas Park closed at the end of June.
Leverock's operated by franchisees in St. Pete Beach and Cape Haze are not affected by the bankruptcy filing.
Gold Coast had been experiencing turnover in management before its Chapter 11 filing in U.S. Bankruptcy Court. The chief executive, Michael Evans, left the chain in August and has not been replaced. Its chief financial officer, Mark Beidel, joined the company in May from WH Smith, a British operator of newsstands and gift shops.
Beidel said the chain will continue to operate at all locations while reorganizing. The decision to file in bankruptcy court, he said, came after a deal to sell the chain fell through.
"We had been engaged in some conversations with a buyer, but he elected recently not to proceed," Beidel said. "That was the precipitating factor."
In addition, Beidel said the six Leverock's were hard hit by declining tourist traffic and most recently by a series of hurricanes that did no harm to property but decimated business.
Gold Coast was formed in 1999 when it bought the Sarasota franchise for Leverock's. In February 2000 the company acquired the Leverock's chain of six company-owned locations from John Stross, George Lewis, Richard Tappan and Chip Phillips. The sale price was not disclosed.
Stross and Lewis retained ownership of the St. Pete Beach Leverock's as franchisees.
In court Thursday, Gold Coast asked the judge to approve an interim loan of $300,000 from its parent company, Flat Rock Grille Holdings Inc. Gold Coast, which had sales of about $17-million last year, reported having just $10,000 cash on hand.
The court approved half the loan requested so the company could pay its 400 employees. A hearing on the remainder of the loan has been scheduled for Oct. 1.
Beidel said funding from Flat Rock, a Tampa company that controls 100 percent of Gold Coast's stock, was crucial.
"We've put the financing in place to enable us to step back and analyze all our options," he said. "We want to maximize our value for our landlords, creditors, lenders and employees, while continuing to provide our customers with quality service."
When it bought the Leverock's name four years ago, Gold Coast was banking that a longtime Tampa Bay area tradition would pay off. The chain was started by Johnny Leverock in Pinellas Park in 1948. The previous owners acquired the business from Leverock's family in 1981 after his death.
Gold Coast had planned to expand the concept through additional franchises. But growth was elusive, despite generous infusions of cash from venture capital firms.
Since 2000, the chain, through its parent company, has received more than $500,000 from private investors. Among the creditors listed in court records are the Tampa venture capital firm of Lovett Miller, owed about $274,000; Jefferson Capital Partners in Richmond, Va., owed nearly $126,500; and SSM Venture Partners II Ltd of Memphis, owed more than $100,000.
Lewis, part of the foursome who sold the chain to Gold Coast, declined to speculate on the problems encountered by the company. But he said the St. Pete Beach location, which he opened in 1984, remains solidly profitable.
"We've stuck with the same recipes and the same basic menu we've had from the beginning," he said. "The customer response here has been positive."
Lewis was optimistic that the remaining Leverock's restaurants could be revived. "They've got long-term leases on some premier waterfront locations that have the ability to do the volume it takes to be profitable," he said.
Kris Hundley can be reached at hundleysptimes.com or (727) 892-2996.