Receiver named for Tony Packo's Inc.; co-owner seeks liquidation

A Lucas County Common Pleas Judge has appointed an outside receiver to operate the various businesses of Tony Packo's Inc., the local restaurant chain made world famous more than 30 years ago by the 1970s television show M*A*S*H*.

Lucas County Common Pleas Court Judge Gary Cook appointed Steve Skutch, owner of Skutch Co., Ltd., of 2923 Hardale Blvd., to oversee the business operations of the Packo's enterprises after its lender Fifth Third Bank, foreclosed on almost $4 million in loans.

Meanwhile, attorneys for co-owner Anthony Packo Jr., son of the restaurant chain's namesake, asked the court to allow Mr. Skutch to act as not only a receiver, but as a “liquidating trustee” to disband the various Packo corporate entities under the control of its two member board, Mr. Packo and his nephew Robin Horvath.

“The parties... are not capable of operating the business together,” attorneys for Mr. Packo argued. “The appointment of a receiver (and liquidating trustee) will bring all of the assets under the control of the Court and allow the orderly sale of the business,” that will allow creditors to be repaid and employees to keep their jobs.

Judge Cook made the appointment late Wednesday.

EDITOR'S NOTE: The following appeared in the Aug. 19, 2010 printed edition of The Blade.

Tony Packo's Inc., a famous Toledo restaurant chain already entangled in a family feud, now has its lender filing for foreclosure and seeking a court-appointed receiver.

The filings Wednesday by Fifth Third Bank, which claims it is owed $2.7 million, follow a legal battle that emerged in the last month in which one Packo family member is suing others, citing questionable transactions and the possible insolvency of the business.

A hearing on the request for a receiver is set for 9 a.m. Thursday before Lucas County Common Pleas Judge Gary Cook.

"As a result of the maturity and defaults under the notes, as well as the pendency of the shareholder dispute actions," Fifth Third said in its lawsuit, it is concerned its interest in the collateral of Packo property and assets pledged on the loans was "at risk."

The Cincinnati-based lender requested that Steve Skutch, managing member of the Skutch Co. Ltd., be appointed as the receiver.

Bank officials did not return calls seeking comment.

An attorney representing Tony Packo, Jr., the firm's president, said last week that the firm was negotiating its debt with the bank.

Robin Horvath, who is company treasurer, filed a lawsuit last month against his uncle, Tony Packo, Jr., and Mr. Packo's son, Tony Packo III, who is a company manager, maintaining they withheld from him company financial records and need to explain questionable disbursements.

The litigation takes a prominence beyond a regular small-business family and financial dispute because the restaurant chain became famous and a tourist attraction from references to it in the 1970s television series M*A*S*H and from its collection of encased hot dog buns signed by celebrities at its East Toledo restaurant.

Fifth Third, in its foreclosure filing, cited the East Toledo firm's lack of payment or default on its nearly $4 million in loans, of which $2.7 million is still owed. It cited two notes totaling $650,000 in which payments were due two weeks ago, and five other loans totaling $3.32 million in which payments are overdue.

The loans, according to the court filings, said the company pledged as collateral all of its business assets, plus property at 1901, 1902-1912, 1918-2924 Front St.; 1940 and 1942 Front; 1933 and 1935 Consaul St., and 7 South Superior St.

Shortly after the bank's foreclosure action, an attorney representing Tony Packo's Inc., Tony Packo, Jr., and Mr. Horvath filed a response with the court conceding the bank's claims.

It was co-owner Mr. Horvath who initially asked the court to place the business under the control of an outside receiver.

Mr. Horvath alleged in his lawsuit last month that he discovered this year more than $100,000 in questionable transactions paid to Mr. Packo III or the firm's controller, Cathleen Dooley. When he tried to investigate, company records were kept from him by the Packos and Ms. Dooley, he alleged.

His suit requests private stock in the company held by the Packos be sold to him for $100,000; the release of financial records; an accounting of any funds wrongfully disbursed and placed in trust, and unspecified damages.

He filed a motion requesting a receiver be appointed to manage the company. On Aug. 11, Tony Packo, Jr., filed a motion requesting that the receiver request be denied.

Last Friday, Mr. Horvath filed a second lawsuit that asks for a jury trial and alleges that Mr. Packo, Jr., Tony Packo III, and Ms. Dooley conspired to misappropriate undetermined funds from both Tony Packo's Inc. and its subsidiary, Tony Packo's Food Co.

The suit requests an accounting and return of the misappropriated funds, and seeks punitive damages. The July case and the most recent case since have been combined and are awaiting a trial date.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.