Brown's Chicken files Chapter 11 bankruptcy
Bankrupt Brown's Chicken & Pasta Inc. plans an aggressive makeover and aims to sell its remaining company-owned restaurants.
New decor, a new logo with a shortened name of just Brown's, and a so-called new attitude are planned for all the restaurants. Some could be closing, including one in Elk Grove Village by Jan. 4.
The restructuring plan, which includes these makeover measures, is expected to be approved in U.S. Bankruptcy Court, President Toni Portillo said Wednesday.
"The filing will help us make these changes and to go out of the company-store business and focus just on the franchising," said Portillo, who has been president since 2006.
The Elmhurst-based fried chicken maker filed for Chapter 11 bankruptcy on Tuesday, listing Frank Portillo Jr. of Hinsdale as 65-percent owner and Thomas Kennefick of Villa Park as 35-percent owner. The partners were estranged in recent years after Kennefick filed a wrongful termination and shareholder lawsuit against the company in 2007. This year, the DuPage County Circuit Court awarded Kennefick about $880,000. Kennefick did not immediately return calls.
That lawsuit award and legal costs, the recession, and the stigma of the 1993 killings at its Palatine restaurant all contributed to the company's financial woes, said Portillo.
"We never really recuperated from that in Palatine," Toni Portillo said.
The bankruptcy case cites less than $500,000 in assets and more than $2 million in liabilities. Those owed money include Frank Portillo at $100,000, J. Kennefick Consulting at $315,673, Divincenzo Schoenfield Swartzman at $243,645, American Express at $95,679, Mt. Prospect Plaza at $25,533, Absolute Vision Products in Addison at $20,000, and Andreas Vlahos of Inverness at $14,966. The Kennefick's $880,000 award will be included in an amended filing, said attorney Richard Golding of Chicago.
"Like all chains, they've been impacted by the recession, but they're seeing some rebounding now," said Golding, who will be in court on Monday to file motions to continue business operations.
Brown's has 39 stores, compared to about 150 in its heyday. Two stores remain company-owned and Portillo has been in discussions with potential buyers. If the stores aren't sold, then they'll be closed, Toni Portillo said said.
Brown's has about 50 workers at the company level and about 600 workers systemwide, including the franchises. Toni Portillo said she aims to keep workers employed and the restaurants open during the restructuring.
The company's roots began in 1949 with John and Belva Brown, who had their own chicken farm and started a fried chicken business, according to the company Web site.
In the early 1950s, Brown founded a restaurant in South Suburban Bridgeview. A fishing buddy of Brown's offered his son, Frank Portillo Jr. to draw up a blueprint needed to obtain a building permit. Brown and Frank Portillo then became partners. In 1964, the partners formed Brown & Portillo Inc. and began franchising Brown's Chicken restaurants.
After franchising and opening around 25 Brown's restaurants, Brown retired and Portillo took over. Through the 1970s and 1980s Portillo opened about 175 restaurants. But it was the Palatine tragedy in 1993 when Brown's revenues plunged about 40 percent, said the company.
After seven workers were killed inside the Palatine restaurant, customers were fearful and stayed away. About 100 restaurants were closed because they couldn't get financing. Banks sold company real estate at an auction. To counter competition, a new lease on growth was found in the popularity of pasta and the company was later renamed, the Web site said.
Two men, James Degorski and Juan Luna, were convicted of the Brown's murders and sentenced to life in prison.