26 BK 05071
Creditor R Restaurant Group, LLC asked the court to appoint a chapter 11 trustee for Debtor MPH Restaurants, LLC after the Debtor defaulted on a debt incurred in connection with the sale of the Debtor to Marc Hochmuth.  The Debtor owns three LLCs that once operated three restaurants.  Two restaurants have now ceased operating.

The Debtor asked to dismiss its case alleging that the wrong entity filed the bankruptcy petition and that the Smith & Wells LLC entity would file for bankruptcy relief. Later the court was told that Smith & Wells would not file for bankruptcy relief.  Mr. Hochmuth filed a chapter 11 bankruptcy case.

A member of RRG filed a Declaration outlining several withdrawals of cash made by or on Mr. Hochmuth’s behalf both before and after the Debtor filed for bankruptcy relief.

The court did not accept the Debtor’s position that it had no assets because its Smith & Wells entity operates positively.  In addition, the several withdrawals on behalf of Mr. Hochmuth and to Petty Cash were highly unusual for a restaurant, according to an RRG member who has significant experience in the restaurant industry.

Cause to appoint a trustee was found on two grounds:  the withdrawals of funds and the changing positions taken in court that Smith & Wells would file for bankruptcy relief upon the Debtor’s voluntary dismissal, which position was changed as the court was later told that Smith & Wells would not file for bankruptcy relief.