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May 02, 2018

Garces Group files for bankruptcy after years of financial instability

Restauranteur's money troubles largely related to closing of Atlantic City's Revel Casino

The Garces Group, of big-time Philly chef and restauranteur Jose Garces, filed for Chapter 11 bankruptcy on Wednesday and announced a new partnership that could help the group out of its financial troubles.

Garces, the man behind Amada, Buena Onda, Distrito, Village Whiskey, Volver and countless others across the country, announced a partnership with Ballard Brands for $5 million cash and assumed liabilities. The transition is expected to close in between 40 and 65 days.

“With today’s filing, we are able to chart a new course for our future by stabilizing our financials while we continue our commitment to provide high-quality culinary and hospitality to our guests,” Garces said in a news release. “The last couple of years have been challenging, there is no doubt.

Ballard Brands, based out of Covington, Louisiana, has more of a down-home feel, and has worked with brands like The Original City Diner, New Orleans Roast coffee and P.J.’s Coffee.

The merger will hopefully “measure the strengths of both entities,” said Garces Groups' Kate Wilhelm, and there aren’t any plans to close any of the current restaurants, either, she said.

And yes, Garces himself will be a part of new concepts and locations, too.

“Jose will absolutely be very much involved in the creation of any new concepts moving forward, and that was part of Ballard’s desire,” Wilhelm said.

Trouble for the Garces Group began back in 2014 with the closing of Revel Casino in Atlantic City. Four of his restaurants that were closed in that location provided a significant portion of profit for the group, and deflated income.

Most recently, Garces has been associated with multiple lawsuits, the total now reaching six. In September, a Delco-based wholesale food supplier filed a lawsuit against Garces claiming the supplier was owed more than $86,000 in unpaid bills. Last month, Jim Sorkin, a food vendor and early Garces investor, filed yet more lawsuits against the chef.

Three investors (including Sorkin) also are suing to take managerial control away from Garces for his first three restaurants, all of which are in Philadelphia: Village Whiskey, Tinto, and Amada. The investors claim Garces “systematically” breached financial agreements “for his own benefit” and has been conducting unauthorized cash sweeps for at least seven years. 

Wilhelm said the lawsuits pertaining to those companies will be on hold until the merger is finalized.

For right now, Garces said everything is business-as-usual.

“To our employees, our patrons and so many of our partners — we want you to know that we are open for business and thank you for sticking with us," he said.