Quality Fresca I - Chapter 11 Case Summary

Quality Fresca I, LLC, a 38-unit Moe's Southwest Grill franchisee, filed for Chapter 11 after post-pandemic foot traffic losses, inflation, rising food and shipping costs, and reduced labor availability eroded its liquidity, and after the franchisor declared it in default under all of its franchise agreements in August 2025. Having already shrunk from 69 restaurants to 38 through successive closures of underperforming stores, the Debtor is pursuing a dual-track reorganization or value-maximizing sale that would exit remaining unprofitable locations and rationalize its lease portfolio and cost structure, supported by proposed debtor-in-possession financing and the use of cash collateral. Its approximately $16 million of secured debt is held by GR Loanco 1 LLC, an affiliate of the Debtor's ultimate parent, which acquired the prepetition credit facility from PNC Bank in May 2026 and has since extended two additional secured loans.

Business Description

Headquartered in Palm Beach, FL, Quality Fresca I, LLC (the "Debtor" or the "Company") is a franchisee operator of Moe's Southwest Grill® restaurants. Founded in 2000 and based in Atlanta, Georgia, Moe's Southwest Grill® is a fast casual restaurant franchise known for serving fresh, made-to-order Southwestern and Tex-Mex food.

As of the Petition Date (Aug. 4, 2026), the Debtor operates its Moe's Southwest Grill® restaurants out of 38 locations (each, a "Restaurant," and collectively, the "Restaurants") in markets located in Florida, South Carolina, Virginia, and Washington D.C., which, according to the Debtor, makes it one of the largest franchisees in the country.

Recent Financial Performance

For the fiscal year ending 2025, the Debtor recorded net sales of $58,941,831 and total negative consolidated EBITDA of $111,204.
As of Dec. 31, 2025, the Debtor's balance sheet reflected assets of approximately $44 million against liabilities of approximately $52 million.
Year-to-date through June 15, 2026 (P6), the Debtor generated revenue of $26,382,413 and EBITDA of $315,254, with total year-to-date store-level EBITDA of $1,149,360.

G. Michael Verdisco, a Managing Director with Gulf Atlantic Capital Corporation ("GACC"), was appointed Chief Restructuring Officer (the "CRO") of the Debtor on July 9, 2026, and reports to Joseph J. Luzinski, the Debtor's independent manager.

Corporate History

On or about March 9, 2020, the Debtor acquired 67 franchised Moe's Southwest Grill® locations in Florida, South Carolina, Virginia, Maryland, and the District of Columbia, with the stated goal of owning and operating a best-in-class Moe's Southwest Grill® franchise group and bringing the Moe's Southwest Grill® experience to communities across the Southeast.

In August 2021, the Debtor acquired two additional Moe's Southwest Grill® restaurants in Florida, bringing the Debtor's total to 69 restaurants.

Organizational Structure

The Debtor is a limited liability company formed under the laws of the State of Delaware.
Non-debtor Quality Fresca I Holdings, LLC ("Holdings") is a manager and the sole member of the Debtor.
Joseph J. Luzinski serves as the Debtor's independent manager.

Operations Overview

The Restaurants are informally organized into six geographical groups:

District of Columbia/Maryland/Virginia (DMV): 7 Restaurants
Ft. Myers/Naples: 6 Restaurants
Tallahassee: 3 Restaurants
Jacksonville/Gainesville: 11 Restaurants
Tampa: 4 Restaurants
Charleston: 7 Restaurants

Franchise Agreements and Leases

Each of the Restaurants is subject to its own Moe's Southwest Grill Franchise Agreement (each, a "Franchise Agreement," and collectively, the "Franchise Agreements") between Moe's Franchisor SPV LLC, an affiliate of GoTo Foods (the "Franchisor"), and the Debtor.
- Each Franchise Agreement grants the Debtor a non-exclusive license to operate a specific Restaurant using the Moe's Southwest Grill® trademarks, service marks, and system, and provides for certain discretionary operational support from the Franchisor, in exchange for payment of certain royalties and advertising contributions to the Franchisor.
- An indirect parent of the Debtor provided guarantees of certain of the Debtor's obligations under the Franchise Agreements.
Each of the Restaurants is also subject to its own lease agreement (each, a "Lease Agreement," and collectively, the "Lease Agreements") between the Debtor and the lessor of the property on which the Restaurant is located.

Workforce

As of the Petition Date, the Debtor employs approximately 603 employees (each, an "Employee," and collectively, the "Employees"), of whom 49 are salaried (the "Salaried Employees" or "Full Time Employees") and 554 are paid hourly (the "Hourly Employees" or "Part Time Employees").

The workforce is comprised of 589 restaurant-level Employees, who perform functions necessary to prepare and serve food, receive stock and inventory, and handle daily upkeep of each restaurant location.
An additional 14 Employees serve as District Managers, Directors of Operations, Vice President of Operations, and Catering sales managers and specialists.

Prepetition Obligations

As of the Petition Date, the Debtor reported approximately $16 million in aggregate principal outstanding under its secured facilities — all of which is held by GR Loanco 1 LLC, an affiliate of the Debtor's ultimate parent — and approximately $2.1 million in trade payables. The Debtor's prepetition capital structure is summarized below:

Credit Agreement

On or about March 9, 2020, in connection with its initial acquisition of the 67 Restaurants, the Debtor, as borrower, and Holdings, as guarantor, entered into a Credit Agreement (the "Credit Agreement") with BBVA USA as Administrative Agent and Lender. As originally executed, the Credit Agreement provided for the following facilities:
- Term Loan with an original commitment of $32,500,000;
- Development Line of Credit ("DLOC") with a commitment of $4,000,000; and
- Revolving Line of Credit ("RLOC") with a commitment of $500,000.
In June 2021, PNC Bank, National Association ("PNC") became the successor to BBVA USA as Administrative Agent and Lender under the Credit Agreement.
The obligations under the Credit Agreement are secured by a first-priority lien on substantially all of the Debtor's assets pursuant to a Guaranty and Security Agreement dated March 9, 2020 (the "First Security Agreement") among the Debtor, Holdings, and PNC.
The Credit Agreement has been amended 11 times, most recently pursuant to the Eleventh Amendment to Credit Agreement dated March 26, 2026 (the "Eleventh Amendment"), which, among other things, extended the Final Maturity Date to April 30, 2026.
On or about May 5, 2026, PNC sold and assigned the Credit Agreement and the First Security Agreement, and its rights therein, to GR Loanco 1 LLC (the "Prepetition Lender"), an affiliate of the Debtor's ultimate parent.
As of the Petition Date, approximately $15,200,000 in aggregate principal remained outstanding under the Credit Agreement, plus accrued and unpaid interest, fees, costs, and other charges.

Second and Third Loans

Following its acquisition of the Credit Agreement and the First Security Agreement, the Prepetition Lender made a second loan to the Debtor in the principal amount of $700,000, evidenced by a Promissory Note dated as of July 23, 2026 and effective as of May 6, 2026 (the "Second Note").
- The Second Note is secured by a second-priority lien on substantially all of the Debtor's assets, granted pursuant to a Security Agreement effective as of May 6, 2026 (the "Second Security Agreement," and together with the Second Note, the "Second Loan").
- Approximately $700,000 remained outstanding under the Second Loan as of the Petition Date.
On or about July 30, 2026, the Prepetition Lender made a third loan to the Debtor in the principal amount of $100,000, evidenced by a Promissory Note dated as of July 30, 2026 (the "Third Note").
- The Third Note is secured by a third-priority lien on substantially all of the Debtor's assets, granted pursuant to a Security Agreement dated as of July 30, 2026 (the "Third Security Agreement," and together with the Third Note, the "Third Loan").
- Approximately $100,000 remained outstanding under the Third Loan as of the Petition Date.
Pursuant to the First Security Agreement, the Second Security Agreement, and the Third Security Agreement (collectively, the "Security Agreements"), the Debtor granted the Prepetition Lender liens (collectively, the "Prepetition Liens") on substantially all of the Debtor's assets, including Cash Collateral (collectively, the "Prepetition Collateral").

General Unsecured Trade Payables

In the ordinary course, the Debtor incurs trade debt with certain landlords, vendors, suppliers, and taxing authorities in connection with the operation of its business. As of the Petition Date, the Debtor's outstanding trade payables totaled approximately $2,100,000 in the aggregate.

Events Leading to Bankruptcy

Industry Headwinds and Margin Compression

The Debtor has faced significant hurdles resulting from industry headwinds, increased costs, and declining revenue, which have challenged its business and depleted its liquidity. Over the past several years, and particularly following the COVID-19 pandemic, the Debtor's business suffered significantly from loss of foot traffic, resulting in declining revenue without proportionate decreases in rental obligations, debt service, and other liabilities.

Recent increases in the costs of shipping and food, decreased availability of labor, and inflation generally have exacerbated the Debtor's cash flow issues.
Although several of the Restaurants have remained profitable, others have been operating at a loss, resulting in the Debtor's inability to meet its obligations and achieve the financial metrics required under various agreements.
Following the pandemic, the Debtor's business partially recovered, but in 2025, ongoing inflation, increased costs, and competitive pressures that reduced customer traffic caused the Company's EBITDA to decline.

Deleveraging and Footprint Rationalization

From May 2021 through December 2025, the Company negotiated a series of amendments to the Credit Agreement that reduced the outstanding loan balance.
During the same period, the Company closed 19 underperforming stores, reducing its total to 50 as of Dec. 31, 2025. The Debtor has since closed 12 additional underperforming stores, bringing the portfolio to the 38 Restaurants operating as of the Petition Date.

Franchisor Default and Prepetition Negotiations

On Aug. 5, 2025, the Franchisor notified the Debtor that it was in default under all of the Franchise Agreements.
On or about Sept. 4, 2025, the Franchisor and the Debtor entered into Multi-Unit Addendum No. 1, whereby the Franchisor agreed to defer certain outstanding and ongoing amounts due to the Franchisor or its affiliates in order to provide the Debtor with additional time to pay such amounts and to support the Debtor's continued operation of the Restaurants.
- The Debtor complied with its obligations under Multi-Unit Addendum No. 1, which has since expired on its own terms.
Given the Debtor's negative 2025 results and continued decline into early 2026, the Debtor's management began negotiations with PNC and GoTo Foods in the first quarter of 2026 to address, among other things, the Debtor's strained liquidity, the closure of certain underperforming Restaurants, and relief from certain advertising and royalty fees under the Franchise Agreements. These negotiations and discussions continued in the weeks preceding the Petition Date and are ongoing.

Chapter 11 Filing and Go-Forward Strategy

On the Petition Date, the Debtor commenced a voluntary case under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Florida. The Debtor is operating its business and managing its affairs as a debtor-in-possession. To date, no creditors' committee has been appointed by the Office of the United States Trustee for the Southern District of Florida, and no trustee or examiner has been appointed in the Chapter 11 Case.

The principal objective of the Chapter 11 Case is to maximize the value of the Debtor's business for the benefit of all stakeholders, whether through a reorganization that restores the enterprise to sustainable profitability or through a value-maximizing sale process.
According to the Debtor, its restaurant portfolio includes locations that generate positive cash flow alongside a subset of underperforming locations whose unit economics no longer support continued operation. The fundamental objective of the case is to streamline the enterprise by closing and exiting unprofitable locations, rationalizing the Debtor's lease portfolio and cost structure, and emerging with a smaller, healthier, and self-sustaining operating footprint.
The Debtor also seeks to continue to provide employment to its employees and to provide an enterprise that will be a trading partner to many of its contract counterparties and vendors.
The Debtor's immediate objective is to stabilize its operations, continue to operate, preserve liquidity, and minimize any adverse effects that the Chapter 11 Case might otherwise have on its estate by obtaining the relief requested in the First Day Filings.

Concurrently with the filing of the Chapter 11 Case, the Debtor filed certain First Day Filings, including:

A DIP Motion seeking interim and final orders authorizing the Debtor to obtain post-petition financing, granting senior post-petition security interests and superpriority administrative expense status under sections 364(c) and 364(d) of the Bankruptcy Code, authorizing post-petition use of Cash Collateral, approving a DIP Term Sheet, granting adequate protection, and modifying the automatic stay.
A Rejection Motion seeking to reject certain unexpired non-residential real property leases, effective as of the Petition Date.
A CRO Retention Application seeking authority to retain GACC to provide the services of G. Michael Verdisco as CRO, along with additional personnel for the Debtor.
Additional motions addressing employee wages and benefits, insurance, taxes, critical vendor and PACA/PASA claims, cash management, and the retention of Kroll Restructuring Administration LLC as noticing, claims and solicitation agent.
On or shortly after the Petition Date, the Debtor also has filed, or will file, an application to employ Jordi Guso and Berger Singerman LLP as counsel to the Debtor, effective as of the Petition Date. That application is not scheduled to be considered at the first day hearing.