The local operator of a group of Popeyes Famous Fried Chicken stores, burned by $5.5 million in debt from a failed expansion into Virginia recently, has filed for protection from creditors in U.S. Bankruptcy Court.
The filing this week is designed to help District Management Corp. come up with a way to pay off most of its debts and stay in business, according to the company's lawyer, James A. Vidmar. If successful, the court action will leave the onetime operator of 14 local Popeyes stores with four outlets, Vidmar said.
"We have an immediate need to pay off some creditors, so we are going to sell some stores," he said.
On the block are two of District Management's six remaining Popeyes properties -- a store at 4301 Wisconsin Ave. and another at 1755 Columbia Road NW. Both stores have sales of close to $1 million annually, Vidmar said.
D.C.-based District Management already has closed seven Virginia stores and a store on K Street downtown.
"The general plan is to scale down, keep a few of the best stores, pay off a significant portion of the debt and go on," Vidmar said. "The problem is that this company is burdened by debt stemming from a failed expansion into Virginia."
District management's chief executive, Morgan Walker, was unavailable for comment. Managers at the two stores scheduled to go on sale, each of which employs about 20 people, said that they were unaware of their franchise operator's financial problems. "We are doing well, here. That's all I can say," a spokesman at the Columbia Road store said.
There are 12 Popeyes stores in the Washington area, and most are operated through franchise agreements with New Orleans-based Al Copeland Enterprises, which owns the Popeyes name and marketing rights.
Nationally, there are 785 Popeyes outlets, all of them in fierce competition for a piece of the $6 billion fast-food fried chicken business.
But Kit Wohl, spokeswoman for Copeland Enterprises, said that District Management's problems were peculiar to that company. Copeland Enterprises, "is doing well," Wohl said. The bankruptcy filing by District Management "has nothing to do with us" or with the other Popeyes restaurants, she said.
Copeland Enterprises is, however, District Management's largest unsecured creditor. It is owed $1.2 million, according to records at the U.S. Bankruptcy Court in Rockville.
Of District Management's $5.5 million total debt, about $2 million is collateralized, or secured.
The remaining $3 million or so is unsecured, according to Vidmar.