Earlier this month, customers were turned away from many locations of the popular fast food chain, Jack in the Box, throughout the state.
On Thursday, Sept. 17, much to the confusion of customers, Roseville‘s Abe Alizadeh – owner of more than 70 Jack in the Box restaurants, 11 T.G.I. Friday‘s and a plethora of real estate companies – closed his Jack in the Box restaurants due to financial troubles.
“The closing of the restaurants was a surprise to us as well,“ said Corporate Division Vice President Brian Luscomb. “We were, of course, aware of his financial situation, but that aspect did catch us off guard.“
Just as rapidly as they closed, the restaurants reopened, only this time under the protection of the California Eastern District Bankruptcy Court.
All 11 of Alizadeh‘s T.G.I. Friday‘s locations also closed this month.
For his Jack in the Box restaurants, Alizadeh successfully petitioned for Chapter 11 bankruptcy, which experts say prevents debt collection and allows the company time to regain its footing.
Last month, Alizadeh again filed for Chapter 11 for another one of his real estate companies, Kobra Properties, and declared over $270 million in debt. Along with Kobra Associates – Alizadeh‘s Jack in the Box franchises – and several other of his companies, Alizadeh found himself more than $300 million in debt to food vendors, contractors, property owners and employees.
“We were happy to see the restaurants open again so soon,“ Luscomb said. “Our near term goal is of course to keep the restaurants open and running normally.“
Alizadeh expressed a similar goal in a statement issued after successfully gaining Chapter 11 protection.
“Our focus in the days ahead will be to return to normal business operations and to work cooperatively with our creditors to complete this process as quickly as possible,” Alizadeh said. “We apologize to our customers and our employees for the disruption in service.“
Furthermore, many employees and ex-employees of Alizadeh‘s restaurants are upset about more than a temporary stop in service.
One former employee is the representative plaintiff in a class action lawsuit against Alizedah, listing several grievances against many labor law violations.
The complaint, which was filed in Sacramento Superior Court last November, states cases of managers failing to provide overtime compensation and rest breaks as a result of under-staffing each of its Jack in the Box fast food restaurants.
The case, Patricia Morgan v. Kobra Associates, Inc., is estimated to bring in $8 million in unpaid wages, overtime and damages for the plaintiffs, which along with the 20-plus lawsuits picked up by Kobra Properties, would add significantly to Alizedah‘s massive debt.
The state of Morgan‘s case is uncertain, however, as Chapter 11 bankruptcy would make it less likely for any damages to be paid out, as all previously acquired debts must, by order of the courts, be paid out first.
The bankruptcy court has passed down several decisions recently, which Luscomb said were positive steps moving the franchise back to normal service.
Local Jack in the Box staff refused to comment on the situation.
Alizadeh emigrated from Iran in 1977 as a teenager. He got his first job in America working in the kitchen of a Jack in the Box, making only minimum wage. He was chosen as Jack in the Box Franchisee of the Year in 2006, and is currently on their Board of Directors. He built a billion dollar empire, starting from nothing.
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