A federal judge rejected a $5 million purchase offer for Bruegger’s Bagels largest franchisee, questioning in a detailed ruling whether financial professionals who put the company’s 30 locations in upstate New York into bankruptcy took competing purchase offers seriously, the Wall Street Journal reported today. Bankruptcy Judge Paul Warren in his opinion pointed out that Kevin Coyne, who runs the chain’s operations and declared a lender’s $5 million bid to be a bankruptcy auction’s winning offer, was put in power by that same lender in August 2015. Coyne took over after the franchisee fell behind on borrowing promises. After a June 28 auction, Coyne determined that the bid from lender Canal Mezzanine Partners II LP — an offer that consisted of $1.3 million and $3.7 million in forgiven debt — beat an offer from an affiliate of the Bruegger’s franchise owner itself. The bagel chain offered $4.75 million in cash. In his ruling, Judge Warren said that the lender’s bid put the company at “a very serious risk” of not having enough cash to pay legal bills and other crucial debts.
