Judge rejects objections, OKs sale of Packo's chain

Fast-food restaurateur Bob Bennett is eager to take over the five-restaurant Tony Packo's chain, his lawyer says. THE BLADE Enlarge | Photo Reprints

In a 1980 episode of the Korean War television drama M*A*S*H, Tony Packo's ships the gang sausage casings to help them patch together a blood-filtering machine at their field hospital.

After spending nearly 17 months in receivership, the 79-year-old restaurant chain is getting some new blood of its own.

On Monday, Lucas County Common Pleas Judge Gene Zmuda approved the sale of Tony Packo's Inc. to fast-food restaurateur Bob Bennett and his new company, TP Foods LLC. Judge Zmuda selected Mr. Bennett's $5.5 million offer to purchase the franchise from its court-appointed receiver in October. Since then, Robin Horvath, a member of the Packo family who was a half-owner of the company, has brought a spate of objections trying to stop the sale.

In the end, Judge Zmuda ruled the arguments were without merit.

"The court considered oral arguments presented by counsel at the hearing, the written briefs of the parties, all relevant case law, and the record, and finds the receiver's motion well taken and is hereby granted," the judge wrote in his six-page decision.

The five-restaurant chain -- perhaps as famous for the celebrity-signed buns on its walls as for the Hungarian hot dogs on its plates -- was put under the control of receiver Steve Skutch in August, 2010, after Mr. Horvath filed a lawsuit that alleged misspending of corporate funds and contended he was entitled to take over the company from his cousin Tony Packo III and his uncle Tony Packo, Jr. The two Packos owned the other half of the business.

As part of the judge's ruling Monday, Mr. Skutch was given until Friday to submit an order confirming the sale of receivership assets. Chris Parker, Mr. Skutch's attorney, said they were focused on meeting that deadline and had no other comment on the sale.

That order will set the way for the two sides to go to closing, although it wasn't clear when that might happen and when Mr. Bennett would take over company operations. Until that point, Mr. Skutch will continue running day-to-day operations.

David Coyle, an attorney for Mr. Bennett and TP Foods, said his client was pleased with Monday's decision.

"He is very eager to get the deal done and to move on with the new business," Mr. Coyle said.

As part of the purchase agreement, TP Foods will receive the Tony Packo's name, all real estate owned by Tony Packo's Inc. and its subsidiaries, the restaurant's recipes, and even the famous signed hot dog buns. The restaurant gained national notoriety through M*A*S*H, thanks to Toledo native Jamie Farr, who played Cpl. Max Klinger on the show.

Mr. Horvath's attorney, Tom Matuszak, said he had no comment on the ruling but said the matter is already being addressed with the court of appeals.

In his decision, Judge Zmuda wrote that the concerns raised by Mr. Horvath did not address anything substantive in regard to the provisions of the proposed sale and said there has been no objection to the value of the asset purchase agreement or that the sale price is below the operation's fair-market value. "Indeed there is no substantive objection as to any of the terms and conditions set forth in the [asset purchase agreement]," the judge wrote. "There has also been no request to continue or delay the ruling on this motion in light of the criminal charges having been filed against … Packo employees."

Last week, a grand jury indicted Mr. Packo III on aggravated-theft charges alleging he stole $170,000 from the business. Also charged was company controller Cathleen Dooley, who faces three counts of aggravated theft.

Attorneys for both Mr. Bennett and Mr. Skutch argued the indictment wasn't reason enough to stop or delay the sale. Once the confirmation order is filed and signed, there will be one last chance for appeals to be filed on the sale.

Contact Tyrel Linkhorn at: tlinkhorn@theblade.com or 419-724-6134.