The Tony Packo's litigation led to the sale of the company's assets to collect on more than $2.6 million it owes to Fifth Third Bank.
Lucas County Common Pleas Judge Gene Zmuda is expected to decide Thursday which of three bidders will be allowed to buy Tony Packo's Inc.
Separate offers have been submitted by Tony Packo III and Robin Horvath, current owners of the East Toledo restaurant chain, and businessman Bob Bennett, who owns several local Burger King restaurants.
In a hearing yesterday afternoon, Judge Zmuda listened to arguments on why each party's bid should be accepted. The judge said he will carefully weigh the offers.
"The one thing that I'm certain of is the enormity of this decision that I am making," he said. "That decision will be made with a clear head and after careful thought."
Mr. Horvath last year sued to wrest control of the firm from Mr. Packo and his father, co-owner and President Tony Packo, Jr. The litigation has led to a sale of the company's assets to collect on more than $2.6 million in loans it owes to Fifth Third Bank.
Bidders submitted revised offers this week to buy the company, and court-appointed receiver Skutch Co. Ltd presented financial details of each bidder's offer during the hearing.
Mr. Bennett, chairman of Bennett Management Corp. in Toledo and owner of 26 Burger King restaurants, submitted an offer of $5.5 million in cash under the name TP Foods LLC. Mr. Horvath, chief operating officer of Tony Packo's, and his wife, Terrie, have offered at least $4 million in cash under the name Nancy Packo LLC, named for Mr. Horvath's late mother. The Horvath offer includes possible backing from anonymous donors who would not be involved in the ownership of Tony Packo's, an attorney for Skutch Co. said.
Mr. Packo III, executive vice president of Tony Packo's, has joined with other investors to offer at least $3.1 million in cash under the name Front Ballpark Operations LLC. Front Ballpark's investors also include Gus Mancy, president of Mancy's Inc., former local bowling alley owner Darrell Ducat, and Huntington Insurance executive Mario Procaccini.
A bid submitted by Front Ballpark in December would have Mr. Packo owning 2 percent of the company and Mr. Mancy owning 49 percent, with Mr. Ducat and Mr. Procaccini owning the remaining 49 percent.
Under the terms of that bid, Mr. Packo III would have the right to buy out Mr. Ducat's and Mr. Procaccini's shares over time. An attorney for Mr. Packo confirmed that the proposed ownership structure has remained the same.
Each offer included conditions that could affect the valuation of each bid, such as assumption of debt, payments to the company's current owners, and the company's day-to-day financial standing.
A petition signed by 94 of Tony Packo's 170 employees, which said they "want the company to be sold only to a family member," was presented to Judge Zmuda yesterday by attorney Charles Traband. The petition said family ownership would ensure "the integrity, quality, customer satisfaction, and job security that Packo management has demonstrated for almost 80 years."
It contended that outside ownership by Mr. Bennett would "cast uncertainty to this Toledo tradition and its employees."
Attorneys for Mr. Packo argued that Front Ballpark's bid is the best choice, in part, because it would keep the restaurant under family ownership. Attorney Kevin Devaney also said Front Ballpark's bid would be able to close quickly because Mr. Packo is already familiar with the business, and noted that Tony Packo's had reached its highest level of retail sales prior to defaulting on the Fifth Third loan.
"We're here today because of a family dispute," Mr. Devaney said. "We're not here today because management doesn't know how to run the business. In fact, it's quite the opposite."
Mr. Bennett's attorneys argued that his offer should win because it covers all or nearly all of Tony Packo's debts in cash, plus they said that Mr. Horvath and Mr. Packo would need to take on substantial debt to purchase the company. TP Foods' offer includes contingencies to deal with whether Tony Packo's naming rights and recipes belong to the company or its owners, namely Mr. Packo, Jr.
If TP Foods wins, the entity would use executive chefs who have graduated from culinary school to determine whether any recipes it receives are identical to Tony Packo's famous hot dog sauce and chili.
"We wanted to certify that the recipes that are there are the recipes that are producing the food that all of us love at Tony Packo's," attorney David Coyle said.
Mr. Horvath's offer would include $685,000 to buy out company shares for the Packos, who jointly own 50 percent of the company. His attorneys said the payment is intended to end the lawsuit between Mr. Horvath and the Packos, which is separate from the Fifth Third default proceedings, and said Mr. Horvath wants to return the company to prereceivership health.
"This business has gone through a trauma over the last year, to say the least," attorney David Rohrbacher said.
The bidders said they would plan to grow Tony Packo's retail food sales and could consider the possibility of opening additional restaurants in the future.
Contact Sheena Harrison at: email@example.com or 419-724-6103.
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