Starbucks to shut down Aspen location over seven-figure debt
Something’s brewing at Starbucks in Aspen — but not for long.
The Starbucks in Aspen is among the eight coffee shops the company is shutting down Friday because of “issues of nonpayment” with franchisee Manhattan Capital, according to a spokesperson for the Seattle-based chain.
Starbucks and Manhattan Capital first reached a franchise-licence agreement in 2016. The agreement allowed Manhattan Capital to open a certain number of stores and allowed it use of Starbucks trademarks. In addition to the one-time franchise fee per location, Manhattan Capital was required to pay 7% of its stores’ monthly gross revenue and a 1% advertising fee to Starbucks.
The spokesman declined to discuss the particulars of the debt, but according to public records, Manhattan Capital filed for Chapter 11 protection in Eastern Pennsylvania Bankruptcy Court in August. The filing said Manhattan Capital owed $3.9 million to Starbucks in royalties and other fees. Chapter 11 bankruptcy filings allow the debtor to stay in business while it tries to work out a payment plan with its creditors.
Four Starbucks shops in Nashville, Tennessee, are also closing, in addition to individual locations in Louisville and Bowling Green, Kentucky, and Chattanooga, Tennessee, the spokesperson said.
The Starbucks in Aspen opened in the fall of 2018 at the corner where the Cooper Avenue and Mill Street outdoor malls meet. Its opening came in the wake of the 2017 closure of a Starbucks at the gondola plaza at the base of Aspen Mountain and Peach’s Cafe at the corner of Hopkins Avenue and Galena Street.
A message left with Manhattan Capital was not returned after business hours in New York, where the company is based. The company’s website describes it as “a private investment firm that identifies and develops assets with unique potential for capital appreciation in the real estate, hospitality, and sports entertainment sectors.”
Starbucks and Manhattan Capital negotiated a deal finalized in September stipulating monthly payments of $55,000, according to the bankruptcy case. Starbucks, however, petitioned the court to dismiss the bankruptcy because Manhattan Capital had failed to make the monthly payments and had not come up with a reasonable re-organization path out of bankruptcy, according court documents. Manhattan Capital also could not live up to previous agreements tied to the debt, according to Starbucks.
A U.S. bankruptcy judge agreed, dismissing the bankruptcy case Feb. 8.
Starbucks was one of just two creditors in the bankruptcy case and accounted for 99% of Manhattan Capital’s debt, according to court filings.
“Absent complete elimination of Starbucks’ significant valid claims, the Debtor needs Starbucks’ support of any plan it may propose for such plan to be confirmable,” according to a motion to dismiss filed by Starbucks on Jan. 25. “Starbucks has advised the Debtor and this Court that it will not support any plan proposed by the Debtor, particularly one premised on reducing or eliminating Starbucks’ claims. Thus, cause exists to dismiss the Chapter 11 Case because the Debtor cannot propose a confirmable plan and has no reasonable likelihood of rehabilitation.”
In court filings, Starbucks said it entered into a forbearance and settlement agreement with Manhattan Capital in August 2020, waiving $1 million from its then $3.615 million debt.
The agreement called for Manhattan Capital to satisfy the remaining $3.615 million by Sept. 22, 2022.
By April 2022, Manhattan Capital was behind $750,000 on staying current with its payments, and Starbucks terminated the agreement in June while subsequent negotiations fell through, according to filings in the case.
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