K&W Cafeteria Inc. has received federal Bankruptcy Court permission to delay filing its next proposed reorganization plan by three months to March 31.
Judge Benjamin Kahn also approved Wednesday giving the Winston-Salem restaurant chain three additional months, or until May 30, to gain confirmation of the plan.
Approval of the delays come as K&W's owners and management say they want to change course on its future after saying it did not attract an adequate bid for its assets.
K&W, a staple of Southern comfort foods for 83 years, filed for bankruptcy protection Sept. 2 as the latest step in a corporate downsizing that began before the COVID-19 pandemic.
Kahn separately approved the sale of two company-owned properties in Cornelius for a combined $1.47 million.
"While we were hopeful we would find a buyer for K&W Cafeterias, given the current COVID-19 climate, we were not surprised that a buyer did not come forward with an acceptable offer," K&W president Dax Allred told the Winston-Salem Journal on Dec. 11.
"We are working with our attorney to finalize a reorganization plan to be presented to all parties of interest, where K&W will continue to operate."
On Nov. 2, Kahn approved K&W's request for an unidentified "stalking horse" bidder and to conduct an auction for its assets.
A stalking horse is the term used to describe a bidder who sets a minimum price for the assets. Companies hope that other bidders will then emerge with higher offers.
However, on Dec. 8, K&W said it postponed the auction for its assets, which had been set for Dec. 11.
K&W said it "evaluated the bids received, concluded that the bids were inadequate and canceled the auction."
The company says it wants to retain its business assets, continue operations at certain locations and sell certain non-business assets.
K&W currently has 18 restaurants, including three in Winston-Salem and 14 in North Carolina.
K&W said it had 1,035 employees when it entered bankruptcy on Sept. 2. Friday's filing listed 834 employees.
The initial bankruptcy filing listed assets of more than $30 million.
The company has liabilities of more than $22 million. Creditors hold secured claims on $12.56 million in property, and the rest is made up of unsecured claims. It has between 100 and 199 creditors.
The K&W debt owed to Truist Financial Corp. includes a $6.73 million Paycheck Protection Plan loan and a $10.95 million lien claim on accounts, inventory, equipment, parts and general intangibles.
K&W has requested permission to sell seven company-owned but non-core properties, including a residence at 705 Polo Oaks Drive in Winston-Salem with a listing price of $159,000.
Kahn approved Wednesday the sale of a 3,621-square-foot lakefront home and a residential lot in the Lake Norman area.
The lakefront home at 20703 Pointe Regatta Drive was listed as valued at $1.4 million. The potential buyer, identified as Cottons Cove LLC and owned by David Baker, is offering $1.3 million. A filing said Baker has no connection with K&W or company insiders.
The lakefront home was built in 1990, according to the Mecklenburg County Register of Reeds website. It has four bedrooms with three full and two half bathrooms.
The home's property tax value has climbed from $684,000 in January 2003 to $1.11 million in January 2019.
The lot at 20221 Sloop Court was listed as valued at $175,000. Desyers LLC, with Sharon Meyers listed as owner, is offering $170,000. Meyers also has no connection to K&W or company insiders.
The property tax value of the lot has increased from $94,000 in January 2003 to $154,000 in January 2019.
Allred has not responded when asked if the lakefront home was used for corporate functions or by executives or employees.
Allred has said the two properties with proposed buyers are listed as "real estate investments."
"More specifically, K&W invested in the Cornelius real estate in the late 1980s and went on to develop the waterfront community, Pointe Regatta," Allred said. "Fortunately, those investments have performed well over the years. K&W is now selling certain assets as we work to restructure our debt and pay down creditors."
The other four properties up for sale are in Cornelius. They are: a 2.73-acre property known as Regatta Island Drive with a listing price of $6 million; a residence at 20701 Pointe Regatta Drive with a listing price of $999,000; a condominium at 20613 Cutter Court with a listing price of $799,000; and a condominium at 20611 Cutter Court with a listing price of $775,000.
K&W reported Dec. 14 that it has received an offer of $999,000 for the 20701 Pointe Regatta Drive property by Dalton and Julia Cash.