Bowlski’s bankruptcy exit plan will need creditors’ blessing
With the amount of money he owes dwarfing the value of his assets, Bowlski’s driveway in El Jebel has offered a bankruptcy exit plan that hinges on his staying in business and getting creditors’ approval.
“The debtor (Bowlski’s) believes that the plan, as proposed, is workable,” the proposed plan states. “Funding for the Plan will come from the ongoing operations of the Debtor. »
A confirmation hearing for the plan is scheduled for July 28 in Denver, where some creditors will vote on the plan that would also need the court’s blessing.
Bowlski filed for bankruptcy Jan. 2 in Denver after a disagreement with its landlord, Crawford Properties. The Chapter 11 filing “was driven by a mix of issues,” the release plan says. “The COVID pandemic caused the closure of the business, followed by operational restrictions, which caused cash flow problems for the debtor. The problem escalated when the sprinkler system of the premises rented by the debtor failed. outage, causing the business to shut down for a period of time. The second shutdown further aggravated the cash crisis. Additionally, cash flow issues related to COVID restrictions left the debtor with limited cash to manage the shutdown caused by the problems with the sprinkler system of the rented premises.
Lawyers for Crawford Properties, however, argued in court documents that Bowlski was behind on his rent before the pandemic hit in the spring of 2020.
The proposed plan called for Crawford Properties to be repaid $75,000 over a three-month period, beginning one month after the agreement takes effect. Bowlski’s lease with Crawford Properties dates back to August 2016.
Bowlski’s was able to operate during bankruptcy using money from the lender, which was approved by the court. That arrangement expires on July 31 and Bowlski’s is seeking bankruptcy court approval to continue for another six months with more money from the lender, according to a petition filed Tuesday.
Creditors filing secured claims in the bankruptcy proceeding include the Colorado Department of Revenue, for $27,922; Veritex Community Bank, for $352,732; and the SBA, for $158,183, according to bankruptcy records.
Bowlski made payments to Veritex Community Bank and the Revenue Department, which “while awaiting the bankruptcy filing … reduced the amount owed to the taxing authority,” according to the proposed plan.
The plan calls for Bowlski to pay Veritex over 10 years at 6% per annum and to pay revenue service over 5 years at the statutory interest rate.
Bowlski’s has just over $200,000 in assets, including machinery and equipment accounting for $183,850 of the sum, according to the plan. The bowling alley’s unsecured debt exceeds $500,000.
“The total of these secured claims exceeds the value of the debtor’s collateral,” the plan says. “Thus, there is no equity in the debtor’s assets if those assets were sold in a liquidation.”
Unsecured claims against Bowlski’s estate total $161,518.
One month after the plan is approved, if so, Bowlski’s will deposit 8% of its gross revenue into an unsecured creditors account for the first year of the plan. This amount would increase to 9% the following year, 11% the following year, 12% the fourth year and 15% the fifth year. Creditors would be paid on a quarterly basis under the plan.
Based on the plan’s revenue projections for Bowlski, the company would reduce debt to unsecured creditors by $88,305 in the first year. This amount will increase annually to $132,111 by the fifth year.
“Projections show that the debtor will have sufficient income to satisfy payment to creditors after meeting his other expenses,” the plan says.
Bowlski’s has retained legal representation from Wadsworth Garber Warner Conrardy PC and the Law Offices of Kevin S. Neiman.