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Shuttered Charleston-area Church’s Chicken restaurants are in foreclosure

The Church’s Chicken restaurants that shut down over the weekend are owned and operated by a web of South Carolina companies that are being sued for more than $3.3 million in unpaid debts.

In one of the complaints, First Franchise Capital Corp. is seeking to recover more than $2.5 million from about two dozen inter-related businesses led by Charleston-based State Acquisitions LLC.

According to the lawsuit, the debt was part of a $3.65 million loan the borrowers individually guaranteed in late 2014. First Franchise sent them a default notice about six months ago, after the payments stopped.

The lender then filed a foreclosure lawsuit in December 2017 in an effort to seize any equipment and other assets that had been pledged as collateral, including a home in the Old Village of Mount Pleasant that two of the borrowers purchased for $1 million in 2016.

First Franchise is asking a judge to appoint a receiver to take over the 24 Church’s locations, which are in South Carolina and Georgia.

And last week, the Indianapolis-based financier sought a judgment against the borrowers because they had not filed formal replies to the allegations. No hearing has been scheduled. The attorney representing First Franchise did not respond to a request for comment Monday.

In a separate dispute, the owner of 18 of the Church’s properties is seeking more than $815,000 in back rent and unpaid taxes while also saying the wear-and tear of the buildings “exceed reasonable and ordinary” standards in violation of the leases.

New York-based real estate giant Vereit brought its complaint in October in Charleston County. No formal reply had been filed as of Monday. 

Church’s customers learned Saturday morning that the chain’s restaurants on Meeting Street, Sam Rittenberg Boulevard and Dorchester Road had abruptly closed, more than a month after Vereit filed papers to evict them from the properties. That left only the two Church’s, both on Rivers Avenue, still open in the Charleston region.

Church’s corporate office issued a statement Monday.

“We have been told that they closed because the landlord of the property evicted the franchisee,” the company said. “Church’s corporate in Atlanta is in contact with the landlord and is attempting to secure new leases so that the locations could be reopened as company-operated Church’s restaurants. We are doing everything in our power to make that happen. The franchisee has told us he plans to pay all of his employees any and all wages owed.”

The Post and Courier learned of three other closings: one in Greenville and two in Augusta. 

John Eboigbe, a district manager who oversees the Augusta and Columbia restaurants, said rent increases were the reason for the shutdowns. 

Legal documents show Alexander Chatfield Burns is listed as president of the individual companies that run the restaurants.

Burns also is founder of Rational Spirits, a North Charleston distillery, and he was investigated but never charged for his alleged role in the meltdown of an insurance business he ran before moving to South Carolina in 2014. 

He said Monday afternoon he would be issuing a statement within 24 hours. Burns also said his firm, which operates as Chicken of Choice LLC, manages the Church’s locations and that State Acquisitions owns the franchise.

Burns declined to identify the investors in State Acquisitions, but a 2014 loan document showed he was a member. Asked whether he is still an owner of that entity, he referred The Post and Courier to Columbia attorney Michael Beal, who specializes in bankruptcies and financial restructurings. Beal directed questions to Church’s corporate office.

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