The biggest lender to bankrupt Punch Bowl Social Inc. wants a chapter 11 trustee to take control of the entertainment chain, fearing the influence of a potential new financing provider as well as current investor Cracker Barrel Old Country Store Inc., WSJ Pro Bankruptcy reported. CrowdOut Capital LLC, the biggest lender to the Denver-based “eatertainment” business, has asked the U.S. Bankruptcy Court in Wilmington, Del., for the appointment of a trustee, saying Punch Bowl can’t be trusted to make “independent and reasoned business decisions.” Bankrupt companies are usually allowed to continue managing themselves after seeking court protection. In the rare instances when management teams are determined to be incompetent or conflicted, outsiders can be appointed to handle the proceedings. CrowdOut, Punch Bowl’s biggest secured lender when the business entered bankruptcy last month, has been supplying emergency financing on an interim basis. CrowdOut said in its filing that Cracker Barrel and its allies on Punch Bowl’s board negotiated a loan “in the dark of night” with junior lender Sortis Holdings Inc. in violation of terms of the longstanding senior secured loan documents. CrowdOut said the proposed loan is “extremely expensive” and could move higher in the pecking order than its existing debt. It also questioned Punch Bowl’s commitment to run a robust sale process for its assets.
