Max & Erma's, the popular chain of restaurants around Pittsburgh, filed for voluntary bankruptcy protection from creditors on Friday in hopes of reorganizing the troubled business.
The chain filed the Chapter 11 petition in U.S. Bankruptcy Court in Pittsburgh largely to fend off its main bank creditor, National City Bank. Max & Erma's owes the bank about $16 million, said attorney Robert Lampl, who is representing the restaurant chain.
National City recently took legal steps to put the casual dining chain in receivership, a type of bankruptcy where creditors or the court name a receiver to either run the business — or sometimes, just liquidate it.
"This was a reaction to some aggression from National City Bank," Lampl said. "This was necessary to get protection."
Max & Erma's has 106 restaurants, mainly in Pennsylvania, Ohio and Michigan, with a few in Chicago, Washington, Atlanta and Kentucky. Of them, 79 are company-owned and operated, and 27 belong to franchisees.
In a Chapter 11 bankruptcy, owners seek to restructure their debts through court proceedings. Lampl hopes to work out with National City one of those steps — a so-called cash collateral agreement — allowing Max & Erma's to use money taken in at the restaurants to pay its bills.
"This was a pretty quick decision. It's still a work in progress," he said. "But it's going to be business as usual. You want to service your customers, pay your employees and pay your vendors."
Spokesmen for National City and its owner, PNC Financial Services Group, could not be reached for comment.
Max & Erma's company-run restaurants employ more than 5,500 people, Lampl said.
The bankruptcy filing said the chain has between 200 and 999 creditors which Max & Erma's owes a total of between $1 million and $10 million. The chain has between $1 million and $10 million in assets.
Max & Erma's, whose marquee restaurant sits Downtown on Stanwix Street, is owned by G&R Acquisitions, North Side. Its president, Gary Reinert, could not be reached.
The chain was in a financial pinch when Reinert's group acquired it for $10.2 million in July 2008 from a Columbus-based company. The chain started there in 1972, taking the Max & Erma's name from two owners of a bar.
Max & Erma's largest unsecured creditor is FFCA, which is owed $1.7 million, said the filing. The company finances retail properties, especially restaurant chains. The chain owes the Ohio Department of Taxation $1.1 million.
