With the amount of money it owes dwarfing the value of its assets, Bowlski’s alley in El Jebel has proposed a bankruptcy exit plan that hinges on it remaining in business and receiving creditor approval.
“The Debtor (Bowlski’s) believes that the Plan, as proposed, is feasible,” said the proposed plan. “The funding for the Plan will come from the Debtor’s continued operations.”
A confirmation hearing for the plan is scheduled July 28 in Denver, where certain creditors will vote on the plan that also would need the court’s blessing.
Bowlski’s declared bankruptcy Jan. 2 in Denver after a disagreement with its landlord, Crawford Properties. The Chapter 11 filing “was prompted by a mix of issues,” the exit plan said. “The COVID pandemic caused the shutdown of the business, followed by operational restrictions, that caused cash flow issues for the Debtor. The problem was compounded when the sprinkler system at the Debtor’s leased premises failed, causing the business to be shut down for a period of time. The second shut down further compounded the cash flow crisis. Moreover, the cash flow issues from the COVID restrictions left the Debtor with limited cash to handle the shut down caused by the issues with the leased premise’s sprinkler system.”
Attorneys for Crawford Properties, however, have argued in court filings that Bowlski’s was behind on its rent before the pandemic hit in the spring of 2020.
The proposed plan said Crawford Properties would be paid back $75,000 over a period of three months, starting one month after the agreement takes effect. Bowlski’s lease with Crawford Properties dates back to August 2016.
Bowlski’s has been able to operate during the bankruptcy using lender cash, which was court approved. That arrangement expires July 31, and Bowlski’s is seeking the bankruptcy court’s approval to continue another six months with more lender cash, according to a motion filed Tuesday.
Creditors filing secured claims in the bankruptcy proceedings include the Colorado Department of Revenue, for $27,922; Veritex Community Bank, for $352,732; and the SBA, for $158,183, according to bankruptcy records.
Bowlski’s made payments to Veritex Community Bank and the revenue department, which “during the pendency of the bankruptcy case … reduced the amount owed to the taxing authority,” according to the proposed plan.
The plan calls for Bowlski’s paying Veritex over a period of 10 years at 6% per annum and paying the revenue department over 5 years at the statutory interest rate.
Bowlski’s has just over $200,000 in assets that include machinery and equipment comprising $183,850 of the sum, the plan said. The bowling alley’s unsecured debt exceeds $500,000.
“The aggregate of these Secured Claims exceeds the value of the Debtor’s collateral,” the plan said. “Thus, there is no equity in the Debtor’s assets if such assets were sold in a liquidation.”
Unsecured claims against the Bowlski’s estate amount to $161,518.
One month after the plan is approved, if that is the result, Bowlski’s will deposit 8% of its gross revenue into an unsecured creditors account for the first year of the plan. That amount would increase to 9% the next year, 11% the following year, 12% during the fourth year and 15% during the fifth year. Creditors would be paid on a quarterly basis under the plan.
Based on the plan’s revenue projections for Bowlski’s, the business would chip away at the debt to unsecured creditors with $88,305 the first year. That amount will climb annually to $132,111 by the fifth year.
“The Projections show the Debtor will have sufficient income to satisfy the payment to creditors after meeting its other expenses,” the plan said.
Bowlski’s has retained legal representation from Wadsworth Garber Warner Conrardy PC and Law Offices of Kevin S. Neiman.
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