Superior Star - Chapter 11 Case Summary

Business Description

Superior Star, LLC (the "Debtor") is the franchisee and operator of fifty-nine "Hardee's" quick-service restaurants (each a "Restaurant," and collectively, the "Restaurants") dispersed across ten states.

• Fourteen of the Restaurants are located within the Western District of Kentucky, which is more than in any other district.
• In 2025, through operation of the Restaurants, the Debtor generated approximately $80,000,000 in gross revenue.

Brian Bonfiglio serves as Chief Executive Officer of the Debtor, which is a debtor and debtor-in-possession in the above-captioned Chapter 11 bankruptcy case.

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Corporate History

The Debtor purchased the Restaurants in 2023 for approximately $13,000,000. In addition to the purchase price, at closing, the Debtor's principals infused $4,000,000 to improve and support the Restaurants' operations.

• The Debtor's principals have contributed an additional approximately $2.0 million to the Debtor over the past two and a half years, including a recent contribution of $300,000 to ensure that payroll would be made to employees.

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Operations Overview

To preserve its operations and enhance the value of its bankruptcy estate during these proceedings, the Debtor must use its cash-on-hand and the income derived from post-petition operations to pay, among other things, the expenses associated with staffing, stocking, and operating the Restaurants, along with other ordinary and necessary operating expenses. The normal monthly expenses for the Restaurants, not including debt service, average approximately $4.5 million per month.

Cash Management

• In the ordinary course of the Debtor's business, each Restaurant maintains a single, separate bank account into which all of its receipts are deposited (the "Restaurant Accounts").
• Prior to the Petition Date, the funds in the Restaurant Accounts were periodically swept into an account maintained by the Debtor (the "Pre-Petition Sweep Account") at Western Alliance Bank (the "Bank").
• The Debtor intends to open at least two debtor-in-possession accounts at the Bank: a DIP Operating Account, which will replace the Pre-Petition Sweep Account, and a DIP Tax Account. The Debtor seeks to leave the Restaurant Accounts open on the conditions that no disbursements are made from them and that all funds are swept into the DIP Operating Account no less frequently than every 72 hours.

Workforce

As of the Petition Date, the Debtor had approximately 850 employees that are directly employed by the Debtor. Its workforce also includes the following personnel who perform work for the Debtor:

• Twelve of the Debtor's regional managers and above-store-level employees are employees of Stella Solutions, LLC ("Stella") but are paid by the Debtor. (Bonfiglio and Kirchhefer hold membership interests in Stella.)
• Two of the Debtor's C-Suite personnel are employed by Stella, but their salaries are shared, 50-50, between the Debtor and Starcorp, LLC and/or Starcorp HD, LLC (collectively, "Starcorp"), the seller of the Restaurants.
• One employee, Luis Ibanez, is employed by Starcorp, but a portion of his wages is paid by the Debtor because Mr. Ibanez performs work for the Debtor.

The Debtor's payroll functions, including the withholding and payment of payroll taxes, are handled by a third-party payroll service provider, ADP, Inc. (the "PEO"), with all payroll funds paid to the employees from funds disbursed by the Debtor to the PEO. The Debtor last paid its employees on July 6, 2026 for the period from June 16, 2026 through June 29, 2026.

Vendors and Utilities

• In the ordinary course of its business, the Debtor utilizes various vendors to provide food, goods, and services that are critical to the Debtor's operations (the "Critical Vendors"). One of the Critical Vendors, McLane Foodservice ("McLane"), supplies a substantial amount of the food to the Debtor's Restaurants.
• The Debtor also uses an outside book-keeping and accounting service, XB Franchise Solutions, LLC ("XB"), to prepare financial information on a periodic basis that is required by the Franchisor and for other operational purposes. The Debtor does not believe any pre-petition amounts are due to XB. (Bonfiglio and Kirchhefer hold membership interests in XB but are not involved in its management.)
• The Debtor requires services from a variety of utility companies (the "Utilities"), including electricity, water, gas, internet, and waste disposal, for the operation of the Restaurants.
  • Some of the Utilities are currently in the name of the seller who sold the Restaurants to the Debtor, and the Debtor is in the process of moving those Utilities to its name.

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Prepetition Obligations

Secured Debt

• Based upon pre-petition agreements and UCC-1 financing statements, the Debtor believes that Western Alliance Bank asserts a security interest in the Debtor's cash, inventory, and/or accounts, and contends that the Debtor's cash-on-hand and/or Income constitutes "cash collateral" as defined in § 363 of the Bankruptcy Code.
• The Debtor reserves the right to contest the validity, priority, or extent of the Bank's lien and has not yet determined whether any other party may assert an interest in its cash, inventory, or accounts. The Cash Collateral Motion seeks both authority to use cash claimed as collateral and a determination that certain post-petition revenues are not cash collateral. As adequate protection, the Debtor asserts that any interests in its cash and income are protected by the value generated through future operations and offers a replacement lien in post-petition assets, with the same validity and priority as existed pre-petition.

Employee Wages

• As of the Petition Date, there existed approximately $483,000 in earned but unpaid wages owing to the Employees for the pre-petition period from June 30, 2026 through July 8, 2026.
• The greatest amount of gross earned pre-petition wages due to any Employee is approximately $3,800.
• None of the wages subject to the Wage Motion are payable to insiders of the Debtor. In addition to wages, the Employees accrue paid vacation and sick time ("PTO"), which is honored on an ongoing basis and, unless required by law, is not redeemable for cash. The Debtor also pays some or all health insurance premiums for certain Employees, though not for their family members.

Critical Vendor Claims

• The Debtor estimates that, as of the Petition Date, a total of only approximately $903,065 (the "Required Amount") was owed to the Critical Vendors, approximately $101,000 of which relates to utilities, and is sought to be paid pursuant to the Critical Vendor Motion.
  • All but approximately $117,000 of the Critical Vendor claims are essentially current through approximately 30 days prior to the Petition Date; only approximately $117,000 is over 30 days old, which the Debtor intends to pay over time through payments aggregating approximately $11,000 per month.
  • McLane holds a deposit in the amount of approximately $400,000 and is owed approximately $546,000 for pre-petition goods provided to the Debtor.

Utilities

• Pre-petition, the Debtor was generally current on its payments to the Utilities.

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Events Leading to Bankruptcy

Despite its demonstrated ability to generate revenue, the Debtor has continually struggled against unforeseen and uncontrollable circumstances that have prevented it from achieving consistent profitability.

Undisclosed Liabilities and Deferred Maintenance

• Due to various omissions and/or misrepresentations by the seller, almost immediately after acquisition of the Restaurants, the Debtor was forced to absorb extensive and unforeseen deferred maintenance and repair expenses, unpaid taxes, and other latent liabilities.
• These unexpected expenses aggregated to millions of dollars and deprived the Debtor of cash flow that would otherwise be available to meet debt obligations or improve operations.
• The aged physical facilities in which the Restaurants were operating not only gave rise to the expenses discussed above, but also suppressed demand by creating an unattractive invitation to potential customers. Reduced demand, coupled with industry-wide increases in food costs, severely strained the Debtor's ability to generate a profit.

Store Closures and "Dark Site" Expenses

• Prior to the Petition Date, the Debtor closed several under-performing stores and/or terminated certain leases and franchises related to those stores. While those closures and terminations saved the Debtor substantial expenses, with respect to some of the closed stores the Debtor entered into agreements with the landlords and franchisor to continue paying rent.
• These "dark site" expenses are substantial and are of no benefit to, but are a substantial burden on, the Debtor's estate because such locations have been permanently closed and do not generate revenue for the Debtor. The Debtor has determined that the associated agreements (the "Rejected Leases") should be rejected to further reduce its expenses.

Tax Levies and the Chapter 11 Filing

• The Debtor also became delinquent in its payment of some state sales taxes in certain locations, which resulted in the taxing authorities unexpectedly levying the Debtor's bank accounts. These tax levies caused a severe strain on the Debtor's cash flows and, in particular, precipitated the timing of the bankruptcy filing.
• All of these challenges, when combined, created the necessity of these bankruptcy proceedings to restructure the Debtor's operations and liabilities so that it can preserve its business for the benefit of all parties-in-interest.
• The Debtor believes that, through a reorganization that addresses the claims and liabilities of its franchisor and the entity from which the Restaurants were acquired, it can emerge as an operationally and financially durable enterprise, with the ability to employ people, pay taxes, and otherwise be a productive corporate citizen for years to come.