*Dang, what is it about chicken & waffle joints that cause them to be mismanaged? We’ve documented the issues with Gladys Knight Chicken & Waffles in Atlanta where the owner (Shanga Hankerson), the son of the famous singer who the restaurant chain is named after, was arrested for tax evasion and more.
The situation is just as messy in Los Angeles where the president and founder of Roscoe’s House of Chicken N Waffles has been removed by a federal judge who said she doesn’t trust him to run its four bankrupt restaurants “in accordance with the law.”
The Wall Street Journal is reporting that U.S. Bankruptcy Court Judge Sheri Bluebond says that under the management of Herbert “Herb” Hudson, the Roscoe’s chain lost a $3.2 million employee discrimination lawsuit, faced immigration law sanctions, underpaid state taxes and kept an informal accounting system with missing records.
It doesn’t stop there. Judge Bluebond said that Hudson also inappropriately transferred money from Roscoe’s operations to his other businesses, returning it only after a court-filed report revealed the transfers to the court.
At a September 28th hearing, Roscoe’s bankruptcy lawyer Vahe Khojayan argued that the bankrupt restaurant chain is actually profitable—making more than $200,000 a month—and contends that Hudson should be allowed to stay in charge.
READ RELATED STORY: ROSCOE’S CHICKEN N WAFFLES LOSES $1.6M RACIAL DISCRIMINATION LAWSUIT (FILED BY BLACK MAN!)
But Judge Bluebond is not hearing it and rejected the idea.
“No one’s saying this business isn’t making money, but he’s not worried about his creditors’ interests. He’s worried about his own interests.” said the judge about Hudson. “Once the creditors are paid off, he can have his baby back.”
Four Roscoe’s locations filed for chapter 11 protection in U.S. Bankruptcy Court in Los Angeles in March after losing a lawsuit with a former employee who said he was a target of racial discrimination and sexual harassment.
A judge ordered the restaurant chain’s owner to pay about $3.2 million to former Roscoe’s worker Daniel Beasley, a black employee who filed a discrimination and wrongful-termination lawsuit against the chain in 2013. Mr. Beasley said that black employees at Roscoe’s, a black-owned business, were treated worse than Hispanic employees, working later shifts and getting fewer schedule requests, according to Mr. Beasley’s lawyer.
The Roscoe’s chain has grown to seven locations; three locations are owned by Mr. Hudson through a separate company that isn’t in bankruptcy. Before the bankruptcy filing, company officials had discussed expanding nationally.
After the hearing, Justice Dept. officials who have the power to select outside managers proposed to put California financial advisor Bradley Sharp in charge. Judge Bluebond has not approved that request yet.
The judge made the decision to remove Herb Hudson after a financial expert submitted a 20-page report that said the chain’s operations “do not conform to reasonable accounting norms or any semblance of responsible management.”
The Journal’s report goes on to say that Christopher R. Barclay, a court-appointed examiner hired to review its financial accounting practices, “said Hudson has run its operations with a ‘management by intuition’ style. He called Mr. Hudson ‘a master of disguise obsessed with preventing outside scrutiny of his financial affairs.'”
READ RELATED STORY: ROSCOE’S CHICKEN N WAFFLES PARENT COMPANY FILES FOR BANKRUPTCY
Meanwhile, Hudson and his associates at Roscoe’s say they’ve figured out a way take care of all its obligations. They proposed a repayment plan that would pay off approximately $6 million by making $64,025.46 monthly payments over the next eight years.
It sounds good and based on the $200k monthly income that Roscoe’s generates, it certainly sounds doable. But, once again, Judge Bluebond isn’t buying it.
She points out that the chain’s poor accounting records wouldn’t produce reliable financial projections to convince her that the repayment plan would work. Federal law requires the leaders of a bankrupt company to prove that their repayment plan is “feasible” to a judge.
We Publish News 24/7. Don’t Miss A Story. Click HERE to SUBSCRIBE to Our Newsletter Now!
