After four days of leaving voicemails for Star Buffet (Barnhill’s new owner), we finally heard from Bob Wheaton, CEO of Star Buffet. You can read our previous coverage here. The story is in Friday’s paper, but we didn’t have nearly enough room to run the entire interview. So, as a treat for all you BizBuzzers, we would like to present the complete thoughts of Bob Wheaton at told to Carlie Kollath at 4:45 p.m. Thursday …
Star Buffet Inc Holding Co. bought through a bankruptcy procedure 16 of the 41 Barnhill’s locations. The terms of contract were signed and executed and approved by the bankruptcy court. We acquired only the operating assets and assumed no liabilities other than real estate - no employment agreements, no business agreements, we didn’t buy company stock.
There are two classes of creditors - secured creditors/unsecured. The cash we paid went to secured creditors. At least at this point nothing is left over for any number of the unsecured creditors.
A gift card holder becomes an unsecured creditor, same as an employee with a vacation plan or a delivery person. All unsecured creditors lost out including people who bought gift cards. The money has exclusively gone to secured creditors.
What we did even though and there was no legal obligation to do, I instructed each general manager of each of the 16 restaurants to honor gift certificates up to $25 provided the balance could be validated. Balances in excess of $25, we take the name and info. And because of the extensive number of gift cards that were sold by the bankrupt company, we are just tabulating those. In one of the presentations we make to bankruptcy court, we’ll have a whole listing of customers that have been shortchanged in the process.
Since we are in the business of operating restaurants, we buy lots and lots of businesses that have failed. We certainly understand this issue going on. We certainly understood how many unfulfilled claims Barnhill’s was going to have and the problems that were going to be caused by this. It doesn’t surprise me because I don’t think the general public understands that when they buy a gift card - a gift card is nothing other than a general obligation.
Say you buy a gift card at Target. Target is likely to be around and the gift card will be honored. But look at what happened with Kmart. Kmart when bankrupt.
People just don’t think that when they buy gift cards they become a general creditor. When we buy a company that’s not in general bankruptcy, we get money in escrow for outstanding gift cards.
If the company meaning Barnhill’s sold large quantities of highly discounted gift cards, there are going to be some unhappy customers. The customer should have said ‘Why am I getting such a good deal?’ There were just some abnormally large balances sold.
What we bought was just operating assets and everything is above board. We are a well respected, high profile company. We don’t do what was done but the fact of the matter is there is no accounting for how much was sold during the last month of Barnhill’s existence.
It’s not money we got but because the company went bankrupt what the people thought was a great deal became no deal at all. The general court is sympathetic to small unsecured creditors. I can’t promise that’s what going to happen.
From a pure business standpoint, I’m not going to honor $500 of gift cards that somebody bought in November than had a face value of $800 and who knows where that money went. That isn’t what we agreed to do
The tagline to story is the customers need to be sure that the company that they paid a lot of money to is going to be around. They should have scratched their head and asked ‘Why am I getting such a good deal to begin with?’
My instruction to managers - For example, a customer has $12.50 on his card. You allow the customer full value of that provided that they give the card to the manager. So when we go to the bankrupcty court with 8 boxes of cards, we can say, ‘Here’s what we gave as credit. We would like reimbursement.’
Timeline - We were scheduled to be back in bankruptcy court yesterday, but the hearing was postponed. The next hearing is scheduled for March 31 or earlier - that’s what the order says - not to be any later.
No restaurants that we have acquired that have been closed. We don’t have any plans of closing any of the restaurants that we purchased. I’ve known
Steve Barnhill for a long time. Barnhill’s is a wonderful brand. It’s a staple in the Southeast.I can understand why people are upset. You should always on any kind of gift card understand who you are giving money to. Gift cards are a slippery slope.
The only thing I can say is we are willing to honor the gift cards under the instructions and we are going to work as hard as we can to get money back for people who paid more money. It’s not in our position to get any back.
We’re going to present the customers’ case in court.
While it is a mouthful, we thought it was enlightening and wanted to share.
You can read the story in today’s paper here:
http://www.djournal.com/pages/story.asp?ID=265993&pub=1&div=News
And, btw, our earlier understanding that Barnhill’s couldn’t determine the gift card balance wasn’t entirely true. Mr. Wheaton said it’s his understanding that there is a way, but he doesn’t know how accurate it is.
The bottom line is if you bought a Barnhill’s gift card, you need to bring it to the restaurant ASAP. If it’s less than $25 you’ll get your money’s worth. If it’s more than that, you need to talk with the general manager Steve Summerford about your options. And, you need to do this sooner than later. Star Buffet is going to court next month and if your name isn’t on the list, you might miss out.
Who buys gift a card for a buffet? Thats just weird.
Brett,
Actually, it’s not that uncommon, especially with the location in Tupelo. As it is right across from the hospital, I’ve bought a gift card or two on occasion for folks who were at the hospital with loved ones so they wouldn’t have to worry about trying to go far from the hospital to grab a bite or worry about paying, too. And, the idea behind buying it there is that with it being a buffet they could hopefully find something they were hungry for, rather than limiting them to, say, only mexican or processed seafood.
Your manager at the New Port Richey, Fl location flatly denied us the use of the gift cards given to my father in the amounts of $25 and $50. Family members gave them these cards because they like the food at the restaurant and it is very close to where they live. They consider this incident to be an example of prejudice towards senior citizens and taking advantage of the elderly. A favorable solution is needed here ASAP or we shall share with all our friends and neighbors the injustice of Barnhill’s decision and request they boycott them all!
Joan McArdle (on behalf of parents, Joan and Chris DiBisceglie
Joan, I’m surprised the manager didn’t offer any other options. The New Port Richey location was one of the 16 purchased by Star Buffet, and Mr. Wheaton told us he had instructed his managers to cash up to $25 on each gift card.
And while we hope that Star Buffet is keeping up with comments on this blog, we don’t know for sure.
So, if you want to make sure that your thoughts are heard by people who can do something, I recommend you call some of the numbers listed below. This list is a repeat from the “Issues at Barnhill’s?” post, where you also might find some help. However, these numbers are for Mississippi concerns so you will have to find out who the Florida counterparts are for some of the contacts.
Star Buffet (current owner of several Barnhill’s)
CEO Robert Wheaton 480-425-0397
Dynamic USA (previous bankrupt owner of several Barnhill’s)
(615) 277-1238,(615) 277-1218, (615) 277-1234
U.S. Bankruptcy Court for the Middle District of Tennessee (handling Dynamic’s bankruptcy case)
Clerk’s Office Staff (615) 736-5584
Brandon Presley, MS Northern District public service commissioner
Voice: (601) 961-5450 Toll-Free: (800) 356-6428
Aberdeen Toll Free: (800) 637-7722 Aberdeen Direct: (662) 369-8148
Jim Hood, Mississippi attorney general
(601)359-3680
The reason we bought them was for our parents, when money is tight they know they can use the gift card to go and get a good round meal, my parents don’t accept charity very well, so we got a lot (like $500) to dole out over the year, (saying they are for birthdays, etc.) My parents don’t eat very well and we were really depending on the cards for them to have access to meat and a good selection of vegatables.
Needless to say my very extended family is not happy.
Don’t worry about a gift card. The food is absolutley terrible. A few months ago, my wife brought home dinner from Barnhills in Apopka Florida. It was great. Everythin tasted fresh and home cooked. Last night we had the opportunity to go to the same resturant in Apopka. The food was best described as awful. I did not know Barnhills filed for bankrupcy and were recently purchased by Star Buffets. The roast beef, besides being tough and tasteless had bones in it. The chicken dumplings had a 2 inch chicken bone it it. Two of the three rolls had not raised. The mash potatoes….man when you can’t even eat mash potatoes…it was such a lousy meal that wasted $20. I wouldn’t go back to Barnhills or Star if it was the last place to eat. Shameful to take good money and in return get such substandard fare. Beware folks. You will be disappointed.
I’m sorry you had a bad experience at the restaurant. However, Star Buffet isn’t to blame.
The company only bought 16 Barnhill’s locations. The one in Apopka is not on the list.
I cut and pasted an article that shows stars didn in fact purchase 4 additional locations, including the one in Apopka Florida. I was going to copy and paste the web adddress but it was too long so I copied and pasted the article below:
SCOTTSDALE, Ariz., March 3, 2008 /PRNewswire-FirstCall via COMTEX/ — Star Buffet, Inc. (STRZ:star buffet inc com
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Last: 5.23-1.37-20.76%
3:59pm 05/06/2008
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STRZ 5.23, -1.37, -20.8%) announced today that its wholly-owned Starlite Holdings, Inc. subsidiary completed the acquisition of four (4) additional Barnhill’s buffet restaurants … one each in Gulfport and Moss Point, Mississippi and Apopka and Orange City, Florida. The acquisition was completed in conjunction with Barnhill’s Buffet, Inc.’s Chapter 11 reorganization and approved by the U.S. Bankruptcy Court of the Middle District of Tennessee. The purchase of these four (4) restaurants brings the total number of Barnhill’s buffet restaurants acquired to twenty (20) and completes Star Buffet’s previously announced plans to acquire certain Barnhill’s buffet restaurants as part of Barnhill’s Buffet, Inc.’s plans to restructure its operations.
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Folks if you want to keep friends don’t worry about the freaking gift card. After eating this food you will need new friends. As stated before I will never go there again. What an awful meal.
I stand corrected. I didn’t realize Star bought additional locations. My apologies.
Since Stacey Gleixner is no longer affiliated with the Barnhill’s bankruptcy case, I understand that the $193.00 balance of the $200.00 card my grandchildren gave me is now totally worthless. Absolutely wonderful! If a ‘Mom & Pop’ store failed to honor an advertising contest or published offer, they’d be run out of business; however, if a large ‘deep-pocket’ chain does so, then it’s just fine with the courts. Isn’t our system Great?