Legal Sea Foods leaves some creditors in the lurch

Several unsecured creditors of Legal Sea Foods still have not been paid by the seafood restaurant chain after its sale to PPX Hospitality Group, according to a news report.

It is not clear how many vendors are still owed funds, but several lawsuits were filed by vendors to Legal last year after the COVID-19 pandemic forced Legal to close its restaurant dining rooms for months, according to The Boston Globe.

After Boston, Massachusetts-based PPX Hospitality Group purchased Legal’s 27 restaurants and processing facility in late December, the directors and officers of the old Legal resigned, according to the newspaper. And, as agreed to by lawyers for the seller, buyer, and secured creditors – bankruptcy attorney Craig Jalbert was named the sole officer and manager of the shell company.

Proceeds from the sale of Legal’s restaurant and processing facility to PPX were used to pay off a secured loan from lenders Rockland Trust and Seacoast Capital.

“At the present time, it is unclear whether there will be funds available to pay unsecured creditors,” Jalbert wrote in an email to The Boston Globe.

PPX did not assume Legal’s liabilities, according to the newspaper

“As PPX Hospitality Brands / Legal Sea Foods Restaurant Group Inc., we are unable to comment on prior contractual relationships with Legal Sea Foods, LLC (old Legal),” PPX Chief Marketing Officer Kim Lapine said in a statement to SeafoodSource. “We of course will and must comply with our obligations under the purchase arrangements.”

For his part, Berkowitz has “no knowledge or control of how funds were dispersed,” his spokesperson, Lindsay Rotondi, told SeafoodSource.

 “As the article states, ‘[Roger] did the best he could under tough circumstances. Roger Berkowitz, like countless restaurant owners across the country, had to make a very difficult decision because of the pandemic. Roger chose the best option to protect jobs, safeguard the future integrity of the Legal Sea Foods brand, and pay vendors. These priorities were made clear to all parties involved in the sale,” Rotondi said. "As part of the transaction, money was earmarked for vendors, but Roger's affiliation ended when the sale was finalized and he has no knowledge or control of how funds were dispersed.”

Jalbert did not respond to a request from SeafoodSource’s for comment.

It is not clear whether seafood suppliers and distributors are included in the list of unsecured creditors. Lawsuits filed against Legal for unpaid bills include AAC Fan Hall Realty for USD 333,000 (EUR 276,000) in rent and DeVito Verdi Inc., a New York advertising agency, which is owed nearly USD 628,000 (EUR 520,000).

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