Story Published:
Dec 14, 2006 at 10:03 AM PST
By
The Associated Press
SEATTLE (AP) - Skipper's Inc., which operates 59 seafood restaurants in five Western states and once had nearly four times as many, has filed for Chapter 11 bankruptcy protection, mostly because of unpaid federal taxes.
Based in suburban Edmonds, Skipper's filed for reorganization Tuesday in U.S. Bankruptcy Court, listing the Internal Revenue Service as its biggest creditor with $2 million in unpaid federal employment taxes and penalties out of $6.7 million in debt.
The company, which employs more than 500 people, most of them part-time, also plans to close five of its Skipper's Seafood 'n Chowder House restaurants, one each in Seattle, Tacoma, Ellensburg, Anchorage, Alaska, and Medford, Ore.
Bankruptcy protection would allow Skipper's to break long-term leases on the five unprofitable stores and on six others that were closed earlier, said James L. Day, the company's lawyer.
"The company has been carrying underperforming locations for quite some time and was unable to close them because of long-term lease commitments," Day said.
Of the 54 remaining outlets, 32 are in Washington state. In addition to the Ellensburg restaurant, Skipper's operates local stores in Yakima and Union Gap.
Four other Skipper's restaurants are operated under franchise agreements, and the company also sells a line of clam chowder, tartar sauce and other packaged products through retail outlets.
Kenneth Williams, principal owner of Skipper's, said in a declaration filed in court that neither he nor other principals knew federal employment taxes went largely unpaid for more than a year after an outside firm was hired to take over accounting functions.
After the IRS called, Williams said, he borrowed $750,000 against personal assets to begin resolving the problem.
He accused former Skipper's finance director Eric Li of arranging to "cover up the accruing tax debt" through false financial reports to senior managers and owners, adding that Li "abruptly disappeared" a month after the problem became known and left $6,000 in unclaimed salary and vacation.
The Seattle Post-Intelligencer reported that efforts to reach Li on Wednesday night were unsuccessful.
Skipper's, known mostly for fried fish, was founded in Bellevue in 1969 and was publicly traded for 20 years, growing to about 220 restaurants around the Western U.S.
National Pizza Co., a large Pizza Hut franchisee, bought Skipper's in 1989 and there was talk of building the chain to 700 outlets, but business went the other direction.
Meridian Capital bought Skipper's in 1995 and the chain was down to 78 outlets in 2002 when it was sold to Seafood Restaurants Northwest LLC, the current owner. According to court filings, sales have declined from $30 million in 2004 to $23 million in the first 11 months of 2006.
Skipper's is a subsidiary of Seattle Crab Co., which also has a stand-alone restaurant in Seattle. Seattle Crab is not part of the bankruptcy filing.
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