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Investors seek to oust Jose Garces from three restaurants Martin Buday

Investors seek to oust Jose Garces from three restaurants

Latest lawsuit alleges mismanagement, nonpayment

In an ongoing legal dispute, early investors in three of Jose Garces’ Philadelphia restaurants have filed a lawsuit seeing to remove the chef-owner from managerial control, according to a report Monday in the Philadelphia Inquirer.

Investors in the Garces Restaurant Group concepts Amada, Village Whiskey and Tinto filed the lawsuit in Philadelphia Common Pleas Court, asking for a temporary receiver to be appointed to operate them.

Lawyers for Spinner Family Holdings and food distributor James Sorkin accuse Garces and his representatives of misappropriating millions of dollars in cash and assets, according to the report.

A spokesman for Garces Group,  however, said the organization has severed its ties with Sorkin as a supplier when it was discovered he was charging above market rate. Regarding Spinner Family Holdings, she said, “When our revenues declined and Amada NY went south, so did our relationship.”

The move is the latest in ongoing legal disputes involving the Philadelphia-based Garces Restaurant Group, founded by Garces, which operates 13 concepts in Pennsylvania, New York and New Jersey.

At least two suppliers, J. Ambrogi Food Distribution Inc., and First Choice Food Distribution, have filed lawsuits this year alleging they have not been paid by Garces Restaurant Group, according to court documents.

In the lawsuit filed Monday, Sorkin and investors Tom and Maria Spinner also allege nonpayment, accusing Garces of mismanagement by borrowing millions to pay off old debts and pursue new endeavors, cutting off payments to investors to hold on to cash as a form of “intra-company loans,” the Inquirer report said.

Investors voted in January to oust Garces as leader of Amada, Whiskey Village and Tinto, which they said were intended to be operated as standalone restaurants. Garces, however, ignored the vote, the lawsuit alleges.

The spokesperson for the group said investors were provided annual updates and were aware the restaurant group operated as an enterprise. “They saw yearly statements on distributions, nothing was hidden,” she said.

The investor vote in January involved minority investors that did not have the ability to remove Garces, the spokesperson said. There was no further action until this week, she added, “Another clear play to damage Jose’s reputation and the success of the organization.”

In an interview with the Inquirer last week, Garces admitted financial struggles, saying he was considering filing for bankruptcy protection for the companies that control some of his restaurants. The spokesperson confirmed that the group is “actively looking to recapitalize the company and are talking to various partners.”

Garces said the company was reeling from the impact of the loss of four restaurants when the Revel Casino closed in 2014, along with the closure last month of an Amada location in New York.

He also confirmed he is considering a possible partnership with Louisiana-based restaurant group Ballard Hospitality, which operates PJ’s Coffee and other concepts, though he did not offer details.

Ballard officials have not responded to requests for comment.

Contact Lisa Jennings at [email protected] 

Follow her on Twitter: @livetodineout

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