Geddo Corporation - Chapter 11 Case Summary

Business Description

The jointly administered Debtors — Geddo Corporation ("Geddo"), Sanos LLC ("Sanos"), Hanford Food LLC ("Hanford"), Bakers Casual Food LLC ("Bakers"), AZ Fresh LLC ("AZ Fresh"), Kings Food, Inc. ("Kings"), and The Masa Corporation ("Masa") (collectively, the "Debtors") — own and operate a chain of 12 franchised Farmer Boys restaurants across California and Arizona. Joseph Sadek ("Joseph") and his brother George Sadek ("George") are the sole and equal owners of Geddo, Sanos, Hanford, Bakers, and AZ Fresh, while Joseph, George, and Omar Mawas each hold a one-third equity interest in Kings and Masa.

• Farmer Boys is a regional fast-casual restaurant chain founded in 1981 that operates a mixed system of affiliate-owned and franchised locations concentrated in the Western United States, offering dine-in service built around high-quality, "farm-fresh" food, a structured franchising program, and system-wide guest programs including loyalty, promotions, and gift cards.
• Joseph and George have operated Farmer Boys franchises since 2007. Joseph serves as CFO and Secretary of Geddo, Managing Member of Sanos, Hanford, Bakers, and AZ Fresh, and Secretary of Kings and Masa.

The Debtors' 12 restaurants are distributed across seven entities: Geddo operates five locations in Brea, La Habra, Orange, Ceres, and Lodi, California (opened between 2012 and 2018); Kings operates two locations in Fontana and Riverbank, California (opened in 2007 and 2009); and single locations are operated by AZ Fresh (Surprise, Arizona, opened November 2025), Masa (Escondido, California, opened 2007), Sanos (Corona, California, acquired from a different franchisee in 2023), Hanford (Hanford, California, acquired from a different franchisee in 2024), and Bakers (Bakersfield, California, opened 2024). In total, the Debtors collectively employ approximately 250 employees, consisting predominantly of hourly workers with varying schedules and a smaller number of salaried employees.

The Debtors generated approximately $24.25 million in aggregate sales in 2025 but incurred an aggregate net loss of approximately $920,610, compared to approximately $21.16 million in sales and positive aggregate net income of approximately $291,162 in 2024.

• While several Debtors remained profitable in 2025 on a stand-alone basis, others experienced significant net losses, largely due to increased occupancy, labor, and food costs and the impact of merchant cash advance repayment obligations on overall liquidity.

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Corporate History

Farmer Boys originated in Perris, California, when five brothers from the Havadjias family converted an existing restaurant they operated, McCoy's Restaurant, into the first Farmer Boys location in August 1981. The brothers had emigrated from Cyprus, where they grew up working on a family farm and in a family restaurant, and gained additional U.S. restaurant experience by operating Astro Burger in Torrance and Theodore's Restaurant in Hollywood before launching Farmer Boys.

Brand Growth and Milestones

• In 1984, Farmer Boys introduced the Farmer's Burger, which later became a signature item and contributed to multiple "best burger" awards in Southern California and the Inland Empire.
• By the mid-1990s, the brand had grown to eight family-owned restaurants and then built a franchise operation, using franchising as the primary vehicle for further expansion.
• Subsequent developments included continued unit growth, introduction of "The Natural" hormone-free burger line in 2012, promotional and branding campaigns (such as a "Bacon Intern" promotion and a temporary "Farmer Girls" rebrand recognizing women team members), and expansion into additional Western states, including Nevada and Arizona.

Over time, the founders' children joined the business in various roles at the Restaurant Support Center and in operations, continuing what the company presents as a "next generation" family-run brand. The company consistently describes itself as a "West Coast" or "farm-to-table" fast-casual concept emphasizing cooked-to-order food, generous portions, and "farm fresh" ingredients.

Debtors' Franchise History

• Joseph and George Sadek, together with Omar Mawas, entered the Farmer Boys system in 2007, opening their first franchised locations in Fontana and Escondido, California, through Kings and Masa, respectively, followed by a second Kings location in Riverbank in 2009.
• Beginning in 2012, Joseph and George expanded their franchise portfolio through Geddo, which now operates five locations across California opened between 2012 and 2018. More recently, the Sadeks acquired existing franchise locations through Sanos (2023) and Hanford (2024), opened a new location through Bakers in Bakersfield (2024), and entered the Arizona market with AZ Fresh's Surprise location in November 2025.

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Operations Overview

The Farmer Boys system comprises over 100 restaurants primarily located in California, Nevada, and Arizona, with the majority being franchisee-owned and a substantial minority affiliate-operated. Farmer Boys functions as a traditional restaurant franchisor that grants franchises to independent owner-operators under a standardized system while also operating its own affiliate-owned locations.

• The franchisor licenses trademarks and distinctive trade dress to approved franchisees under franchise agreements and a Franchise Disclosure Document provided in compliance with federal and state franchise laws. The company seeks "hands-on" operators, often with restaurant or hospitality experience, who are expected to be actively involved in day-to-day operations.
• Franchisees are required to comply with system standards, including use of the approved menu, recipes, and suppliers, adherence to service and cleanliness standards, and participation in system-wide customer programs. The franchisor provides site selection guidance, initial and ongoing training, marketing support, and field-level operations assistance through its Restaurant Support Center.
• Franchise-related revenues typically include initial franchise fees, continuing royalties calculated as a percentage of gross sales, and, where applicable, required contributions to marketing or advertising funds.

Brand Positioning and Customer Programs

Farmer Boys presents a unified guest experience across both franchised and affiliate-owned locations, positioning itself around "farm fresh" and "cooked-to-order" themes, featuring burgers, all-day breakfast items, hand-chopped salads, and other comfort-food offerings prepared to order in an open-kitchen format. Marketing materials stress freshness, large portion sizes, and a family-oriented atmosphere intended to distinguish Farmer Boys from traditional quick-service chains.

• System-wide customer programs include the Very Important Farmer ("VIF") loyalty club, administered through a mobile application and online accounts, under which members earn one point per dollar spent on eligible food and beverage purchases, redeemable for specified menu items or discounts once defined thresholds are reached. The program also offers birthday rewards, member-only offers, and limited-time bonus or double-point events.
• Farmer Boys runs periodic promotions and limited-time offers, often described as "Daily Deals" or tied to national food-related days, and offers branded gift cards that can be purchased and redeemed at participating locations. Qualifying purchases made with a gift card earn VIF points when properly linked to a member account.

Payment Processing and Ordering Channels

The Debtors rely on Worldpay Integrated Payments (the "Payment Processor") for credit and debit card processing and on third-party ordering and delivery platforms — including DoorDash, Grubhub, Uber Eats, Postmates, EZCater, and Foodja (collectively, the "Third-Party Ordering Platforms") — for online ordering and delivery services.

• The Payment Processor enables the Debtors to accept American Express, MasterCard, Visa, and Discover payments both in-store and through Farmer Boys' proprietary digital channels, with funds generally settled to the Debtors' designated bank accounts within one business day, net of applicable fees.
• The Third-Party Ordering Platforms process customer payments using their own arrangements and remit net proceeds to the Debtors on a periodic basis after deducting commissions, service fees, delivery-related charges, refunds, and chargebacks. By way of example, DoorDash utilizes Stripe to process payments through a "Stripe Connected Account" established in the relevant Debtor's name but controlled and managed by DoorDash.
• These channels collectively account for a substantial majority of the Debtors' revenue — approximately 64% to 77% from credit and debit card transactions processed through Worldpay and approximately 7% to 15% from sales through the Third-Party Ordering Platforms.

Workforce

• The Debtors collectively employ approximately 250 employees across their 12 restaurants, consisting predominantly of hourly workers with varying schedules and a smaller number of salaried employees. Payroll is processed on a bi-weekly schedule by SMA Financials ("SMA") using ADP and Intuit/QuickBooks platforms, with employees receiving wages by direct deposit or paper check.
• In the ordinary course of business, the Debtors' aggregate average monthly utility cost is approximately $83,800.

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Prepetition Obligations

As of the Petition Date, multiple parties assert liens against the Debtors' assets, including the Debtors' senior bank lenders, equipment financiers, and approximately 40 merchant cash advance lenders (the "MCA Lenders"). The Debtors have approximately 120 creditors in total. The Debtors' aggregate prepetition collateral pool consisted of approximately $89,373 in cash, $77,282 in accounts receivable, and $132,000 in inventory, for a total of approximately $298,655.

Asserted Secured Claims

• Only certain creditors — principally the Debtors' senior bank lenders and specific equipment finance lenders, including Varilease Corporate Finance Inc. and VFI — appear to hold properly perfected, unavoidable liens in each Debtor's cash, receivables, and inventory.
• Approximately 40 MCA Lenders also assert liens or purported assignments of future receipts against the Debtors' assets. However, the Debtors believe that many of these asserted liens are unperfected, were recorded in the wrong jurisdiction, or are otherwise subject to challenge under the Uniform Commercial Code and Sections 544, 552, and 506 of the Bankruptcy Code.
  • Accordingly, while numerous parties assert liens against the Debtors' assets, the Debtors believe that only a subset of those parties are likely to be entitled to adequate protection as holders of valid, perfected secured claims in cash collateral.

Enterprise Valuation and Going-Concern Considerations

• The Debtors' enterprise value depends heavily on their ability to continue operating their restaurants as going concerns and to generate future cash flow, rather than on any liquidation of their prepetition cash, receivables, and inventory.
• Relative to the total amount of asserted secured claims, the aggregate value of the Debtors' prepetition collateral pool is limited, making preservation of the business and improvement of cash flow during the Chapter 11 cases critical to maximizing recoveries for secured and unsecured creditors alike.

Prepetition Payroll and Employee Obligations

• As of the Petition Date, the Debtors owed approximately $291,000 in aggregate prepetition wage obligations across all seven Debtor entities, subject to the $17,150 per-employee priority cap under Section 507(a) of the Bankruptcy Code. These amounts include prepetition wages owed to nine insiders; however, the Debtors do not seek authority to pay any insider prepetition compensation until authorized under applicable U.S. Trustee Guidelines.
• The Debtors also seek authority to pay associated prepetition payroll taxes coming due in early April 2026 and to continue existing medical and dental insurance arrangements and accrued sick time and vacation benefits.

Liquidity and Cash Flow Projections

The Debtors prepared detailed, restaurant-level and Debtor-level cash flow budgets for an initial multi-month period following the Petition Date, reflecting projected sales, food and paper costs, labor expenses, occupancy expenses, franchise fees and royalties, insurance, utility costs, and other operating expenses.

• The budgets project that, assuming the Debtors are authorized to use cash collateral and maintain uninterrupted merchant processing and Third-Party Ordering Platform relationships, the Debtors will have sufficient liquidity to pay ongoing payroll, meet critical vendor and occupancy expenses, remain current on postpetition franchise fees, and fund utility deposits.
• However, the budgets reflect that the Debtors have little cushion, and adverse variances in sales or unexpected expenses could quickly erode available cash. The Debtors' liquidity is further constrained by the fact that, as of the Petition Date, certain Third-Party Ordering Platforms had withheld approximately $28,800 of proceeds at the direction of MCA Lenders.

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Events Leading to Bankruptcy

MCA Borrowings and Repayment Burden

The Debtors' financial distress was driven by the burden of merchant cash advance obligations incurred in connection with franchise expansion. In an effort to expand their presence in Arizona, the Debtors borrowed more than $5.2 million from approximately 40 MCA Lenders, which was used substantially to fund the buildout of two Farmer Boys franchises in Goodyear and Surprise, Arizona, owned by AZ Fresh, and one franchise in California owned by a non-Debtor entity.

• Of the two Arizona locations, only the Surprise restaurant has opened; the franchisor terminated AZ Fresh's franchise agreement and lease for the Goodyear location, which remains unopened as of the Petition Date.
• Since 2025, the Debtors paid almost $5.1 million to the MCA Lenders on account of $5.2 million in borrowings, or approximately 97% of all amounts borrowed. The MCA Lenders withdrew funds directly from the Debtors' bank accounts on a weekly and, in some cases, daily basis.

Cash Flow Pressure and Operational Defaults

The MCA Lenders' collection efforts caused severe pressure on the Debtors' cash flow, depriving them of the ability to timely pay vendor obligations and resulting in defaults on the Debtors' obligations to the franchisor, vendors, and other trade and service providers.

• The Debtors made extensive prepetition efforts to negotiate with the MCA Lenders, but apart from a limited number, most refused to cooperate.
• As of the Petition Date, certain MCA Lenders had instructed Third-Party Ordering Platforms to withhold or redirect funds otherwise payable to the Debtors. DoorDash/Stripe withheld approximately $27,000 and Grubhub withheld $1,800, for an aggregate of approximately $28,800 that would otherwise have been available to fund the Debtors' operations.

Chapter 11 Filing

Unable to sustain operations with the MCA loans and liens in place, the Debtors filed voluntary petitions for relief under Chapter 11 on March 31, 2026, in the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division.

• The Debtors have determined that restructuring through Chapter 11 presents the best means to address their challenges and promote sustained success.
• To fund operations during the Chapter 11 cases, the Debtors are seeking authority to use cash collateral of their secured creditors in accordance with detailed budgets, with authority to make expenditures in each four-week period up to 115% of the aggregate budgeted amounts, with any additional expenditures above that threshold requiring the consent of affected secured creditors or further order of the Court, while providing replacement liens and enhanced financial reporting to secured creditors and the United States Trustee.