Owners: Al's Burger Shack files for bankruptcy, Durham expansion will not happen

AJEM Hospitality, LLC, the parent company that owns the original Al’s Burger Shack on Franklin Street in Chapel Hill, filed for Chapter 11 bankruptcy protection on Jan. 3, according to documents filed with the U.S. Bankruptcy Court for the Middle District of North Carolina.

The bankruptcy announcement came days after Beer Study announced plans for Al's Burger Shack to join them in their new expansion.

On Saturday, Beer Study said Al's Burger Shack would not be part of the expansion afterall.

"We’ve gotten a lot of questions regarding the participation of Al’s Burger Shack in our upcoming expansion. In light of recent events, we have decided to go in a different direction for the food program. We will share updates on this page and The Boot Room page, so stay tuned. Thanks for your patience here," owners said via a Facebook post.

Southern Village Shack, LLC, which operates Al's Southern Village location, and Governors Club Shack, LLC, which operates the location on Governor's Drive, also filed for Chapter 11 on Jan. 3.

"On Friday, Al's Burger Shack filed for bankruptcy protection. While sales are strong at our three locations, we overextended during expansion and need protection and relief while we reorganize. We appreciate your support and patronage and will need to keep public comments on these proceedings to a minimum. As grateful as we were to have received accolades in recent years, we are even more so to have been afforded this opportunity to regroup. Rest assured we have absolutely no plans to stop slinging burgers and hope to see you at Al's soon," owner Al Bowers said via a press release.

In the filings, the Franklin Street location indicated that it has $50,000 or less in assets, and between $500,000 and $1 million in liabilities. Those debts include more than $249,000 to the IRS for payroll taxes, and an $18,000 merchant cash advance loan from EBF Partners, LLC.

The Governor's Drive location noted $50,000 or less in assets and between $100,001 and $500,000 in liabilities. The creditors listed include U.S. Foods, which is noted as having a "lien on the personal property assets of the Debtor including accounts, goods, inventory, equipment, fixtures, vehicles, as well as proceeds."

The Southern Village location indicated that it has $50,000 or less in assets, and between $500,000 and $1 million in liabilities. Those debts include $290,000 in cash advance loans and $176,000 to the IRS for payroll taxes.

"The Debtors believe that the underlying operations of their restaurant businesses are strong. The Debtors filed these Chapter 11 cases primarily to deal with the effects of various merchant cash advance loans, bearing interest rates in excess of 50 percent, which have strangled their business operations since mid-2017," according to a motion filed for an expedited hearing. That motion was granted with a hearing set for Wednesday afternoon at U.S. Bankruptcy Court in Winston-Salem.

Al and Melody Bowers opened Al’s Burger Shack on Franklin Street in 2013. The couple then opened two more locations in Southern Village and on Governor's Drive in Chapel Hill.

Attorney John Paul H. Cournoyer also released a statement in support of the filing.

"As part of the expansion and opening of two new locations, the companies obtained certain high-interest loans. The restaurants are strong businesses, and if it were not for these loans the companies would be healthy. This is precisely the type of problem that Chapter 11 bankruptcy is designed to fix. I feel confident in our ability to successfully reorganize and that Al’s Burger Shack will be around for years to come. "