Young salad chain Green District filed bankruptcy earlier in August, citing issues with higher interest rates and an inability to pay off debt related to expansion efforts. 

The chain’s move to scale back growth or close restaurants led to multiple legal actions, including landlord Miramar Center Associates winning $108,715.09 in damages in Florida. The judgment led to garnishment and Green District’s operating account being frozen. The salad chain was unable to reach an agreement with the landlord to release the garnishment, and because of this, it sought bankruptcy to “preserve the value of its business for all creditors and parties in interest.”

The company said that if it’s unable to negotiate a voluntary release of the garnishment, it will file a motion to turn over the funds that were in the account previously so that it can continue to pay vendors, make payroll, and comply with sales taxes. Several of the vendors—like US Foods, Lunchbox, American Express, and Chase—are owed money. 

“It is my belief that failure to pay the Critical Vendor Claims will result in vendors refusing to provide these essential goods and services,” said cofounder Chris Furlow in the court document. “Any disruption in the delivery of goods and services would cripple Debtor’s post-petition operations.”

The fast casual entered court proceedings with nine restaurants across Kentucky, Indiana, Ohio, and Colorado. Last year, Green District entered leases for Tennessee, Florida, Arizona, and Utah. However, because of repeated increases in the federal prime interest rate, the company decided it couldn’t expand profitably and worked to resolve obligations with landlords, contractors, and other creditors in connection to these unopened stores. Despite its efforts, Green District still has liabilities remaining.

In response, the brand closed “numerous” underperforming stores starting in May. Two additional outlets are expected to shut down by the end of August. The company paid all wage and related employment taxes and benefits associated with the shuttered units and vacated the premises. 

In addition to the corporate stores, one franchisee with an Indiana-based unit declared Chapter 7 bankruptcy to liquidate assets and cease operations. 

Less than a year ago—when it had 12 locations (11 corporate and one franchised)— Green District told QSR that it wanted to reach 25 restaurants by the end of 2022 and 100 by 2026. In 2020 it received an investment from Castellan Group, a private equity firm based out of Louisville. 

Fast Casual, Finance, Legal, Story, Green District