Feb 17 (Reuters) - Saladworks LLC, which calls itself the largest U.S. franchised fresh salad chain, filed for bankruptcy on Tuesday to fend off litigation by Commerce Bancorp Inc founder Vernon Hill II, its minority shareholder.
Hill’s litigation has made it impossible for Saladworks to find a buyer, restructure or sell additional franchises, the Conshohocken, Pennsylvania-based company said in a filing with the U.S. bankruptcy court in Wilmington, Delaware.
Saladworks said it hired the investment bank SSG Advisors LLC to look for a buyer, and that an entity controlled by Hill is its largest unsecured creditor.
Created in 1986, Saladworks said it has more than 100 locations, and that all will remain open.
Saladworks’ first location was in the Cherry Hill Mall in Cherry Hill, New Jersey, where Commerce was also based. Commerce was sold in March 2008 to Toronto-Dominion Bank.
A lawyer for Hill did not immediately respond to a request for comment.
Hill in March 2008 invested $7.75 million for a 30 percent equity stake, with founder John Scardapane keeping 70 percent, court papers and company announcements show.
But five years later, Hill sought to force Saladworks to buy back his stake, and filed a lawsuit in Delaware Chancery Court when the company did not do so. Hill also gave up his role as chairman of Saladworks’ executive committee, court papers show.
Saladworks has countered it had no legal obligation to meet Hill’s demand. It also said TD Bank recently froze one of its accounts after a lender won two money judgments in Pennsylvania, and Hill acquired the right to collect on those judgments.
In a court filing, Saladworks President Paul Steck said the bankruptcy would put these lawsuits on hold, and enable the company to restructure “free from the value-destructive, distracting litigation in Pennsylvania and Delaware.”
The case is In re: Saladworks LLC, U.S. Bankruptcy Court, District of Delaware, No. 15-10327. (Reporting by Jonathan Stempel in New York and Tom Hals in Wilmington, Delaware)