Babalu BK Declaration

Case 19-61688-wlh Doc 5 Filed 07/30/19 Entered 07/30/19 15:15:52 Desc Main
Document Page 1 of 28
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
In re: ) Chapter 11
)
EAT HERE BRANDS, LLC, et al.1, ) Lead Case No. 19-61688-WLH
)
Debtors. ) (Joint Administration Requested)
)
DECLARATION OF NED LIDVALL,

CHIEF EXECUTIVE OFFICER OF THE DEBTORS,
IN SUPPORT OF CHAPTER 11 PETITIONS AND FIRST DAY ORDERS
Ned Lidvall makes this declaration pursuant to 28 U.S.C. § 1746, and states:
1. My name is Ned Lidvall and I am over 21 years of age. I am the Chief Executive
Officer of each of the above-captioned debtors and debtors in possession, Eat Here Brands, LLC,
Babalu Atlanta #1 LLC, Babalu Atlanta #2 LLC, Babalu Knoxville #1, LLC, Babalu Memphis
#1, LLC, Babalu Memphis #2 LLC, Babalu, LLC, and Babalu Birmingham #1, LLC
(collectively, the “Debtors”), and one of the Managers on the Board of Managers of Eat Here
Brands, LLC. On July 30, 2019 (the “Petition Date”), each of Debtors commenced the above-
captioned bankruptcy cases (the “Bankruptcy Cases”) under Chapter 11 of Title 11 of the United
States Code (the “Bankruptcy Code”).
2. Based on my first-hand knowledge of the Debtors and their operations as well as
information provided to me by representatives of the Debtors, I make this declaration in support
of the various first day pleadings as described in more detail below. I am one of the four
founders of Eat Here Brands, LLC, and served as Chief Executive Officer from 2012 through
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The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax
identification number, are as follows: Eat Here Brands, LLC (9694); Babalu Atlanta #1 LLC (4025); Babalu Atlanta
#2 LLC (5240); Babalu Knoxville #1 LLC (3163); Babalu Memphis #1 LLC (9320); Babalu Memphis #2 LLC
(4558); Babalu, LLC (7673); and Babalu Birmingham #1 LLC (1892). The Debtors’ mailing address is 9755
Dogwood Road, Suite 200, Roswell, Georgia 30075.
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2014. On May 15, 2019, I re-joined the Debtors as Chief Executive Officer in order to assist the
Debtors with their restructuring efforts.
A. The Debtors’ Corporate Formation and Assets
3. Eat Here Brands, LLC, is a Delaware limited liability company (“Eat Here”), and
was formed on or about May 23, 2012, by the filing of Articles of Organization with the
Delaware Secretary of State. Eat Here currently has 52 members and is Managed by its Board of
Managers consisting of William H. Latham, David A. Roberts, Ned Lidvall, Steven Rockwell,
and Ronald A. Rosati. Eat Here owns 100% of the membership interests of the other Debtors
(as well as certain other non-debtor entities) as well as the trademarks and other intellectual
property rights of the Babalu restaurant concept.
4. Babalu Atlanta #1 LLC is a Georgia limited liability company
(“Babalu Atlanta #1”), and was formed on or about June 28, 2016, by the filing of Articles of
Organization with the Georgia Secretary of State. Babalu Atlanta #1’s sole Member is Eat Here.
Babalu Atlanta #1’s Managers are William H. Latham and David A. Roberts. Babalu Atlanta #1
owns the restaurant assets located at the Debtors’ restaurant located at 33 Peachtree Place, N.E.,
Atlanta, Georgia 30309 (the “Atlanta Restaurant”).
5. Babalu Atlanta #2 LLC is a Georgia limited liability company
(“Babalu Atlanta #2”), and was formed on or about April 12, 2018, by the filing of Articles of
Organization with the Georgia Secretary of State. Babalu Atlanta #2’s sole Member is Eat Here.
Babalu Atlanta #2’s Managers are William H. Latham and David A. Roberts. Babalu Atlanta #2
owns the restaurant assets located at the Debtors’ developing restaurant located at Roswell
Square in Roswell, Georgia (the “Roswell Restaurant”).
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6. Babalu Knoxville #1, LLC is a Tennessee limited liability company
(“Babalu Knoxville #1”), and was formed on or about January 23, 2015, by the filing of Articles
of Organization with the Tennessee Secretary of State. Babalu Knoxville #1’s sole Member is
Eat Here. Babalu Knoxville #1’s Sole Manager is William H. Latham. Babalu Knoxville #1
owns the restaurant assets located at the Debtors’ restaurant located at located at 412 S. Gay
Street, Knoxville, Tennessee 37902 (the “Knoxville Restaurant”).
7. Babalu Memphis #1, LLC is a Tennessee limited liability company
(“Babalu Memphis #1”), and was formed on August 11, 2013, by the filing of Articles of
Organization with the Tennessee Secretary of State. Babalu Memphis #1’s sole Member is
Eat Here. Babalu Memphis #1’s Managers are William H. Latham and Ned Lidvall. Babalu
Memphis #1 owns the restaurant assets located at the Debtors’ restaurant located at 2115
Madison Avenue, Memphis, Tennessee 38104 (the “Memphis East Restaurant”).
8. Babalu Memphis #2 LLC is a Tennessee limited liability company
(“Babalu Memphis #2”), and was formed on or about June 28, 2016, by the filing of Articles of
Organization with the Tennessee Secretary of State. Babalu Memphis #2’s sole Member is
Eat Here. Babalu Memphis #2’s Managers are William H. Latham and David A. Roberts.
Babalu Memphis #2 owns the restaurant assets located at the Debtors’ restaurant located at 6450
Poplar Avenue, Memphis, Tennessee 38119 (the “Memphis East Restaurant”).
9. Babalu, LLC, is a Mississippi limited liability company (“Babalu”), and was
formed on or about July 1, 2010, by the filing of Articles of Organization with the Mississippi
Secretary of State. The original Members of Babalu were William H. Latham and David A.
Roberts. On or about May 23, 2012, pursuant to that certain Contribution Agreement, Mr.
Latham and Mr. Roberts contributed their membership interests in Babalu to Eat Here for the
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consideration stated in the Contribution Agreement. Accordingly, Babalu’s sole Member is
Eat Here. Babalu’s Managers are William H. Latham and David A. Roberts. Babalu owns the
restaurant assets located at the Debtors’ restaurant located at 622 Duling Avenue, Jackson,
Mississippi 39216 (the “Jackson Restaurant”).
10. Babalu Birmingham #1, LLC is an Alabama limited liability company
(“Babalu Birmingham #1”), and was formed on or about October 16, 2013, by the filing of
Articles of Organization with the Alabama Secretary of State. Babalu Birmingham #1’s sole
Member is Eat Here. Babalu Birmingham #1’s Managers are William H. Latham and Ned
Lidvall. Babalu Birmingham #1 owns the restaurant assets located at the Debtors’ restaurant
located at 2808 7th Avenue South, Birmingham, Alabama 35233
(the “Birmingham Restaurant”).
B. The Babalu Concept and Restaurant Openings.
11. The Babalu concept was created by two successful restaurateurs, William H.
Latham and David A. Roberts, who have owned or operated restaurants both in and outside of
Jackson, Mississippi, for more than 30 years. The Babalu concept was named after the signature
song of the television character Ricky Ricardo, who was played by Desi Arnaz in the television
comedy series I Love Lucy. The Babalu concept features upscale Latin-inspired cuisine born out
of the love and respect for food and for music genres such as the guaracha, cha-cha, and Latin
jazz, which is a major component of the Babalu concept (the restaurants commonly plays Cuban,
Spanish, and Latin music of all genres). In 2010, Mr. Latham and Mr. Roberts opened the first
Babalu restaurant, the Jackson Restaurant, in Jackson’s historic Fondren neighborhood in a
former elementary school.
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12. In early 2012, Mr. Latham and Mr. Roberts formed Eat Here to function as the
Babalu concept’s restaurant holding company. At that time, Eat Here held an interest in the
Jackson Restaurant, a Five Guys franchise that owned and operated four Five Guys restaurants in
Mississippi, and two fine dining restaurants. Eat Here was initially financed through a capital
contribution in exchange for common equity by the four founders (including Mr. Latham and
Mr. Roberts) and the sale of preferred stock through a private placement offering memorandum.
In 2015, Eat Here sold the Five Guys franchise, and then sold the fine dining restaurants in 2017
and 2019 respectively, in order to focus on the development of the Babalu concept.
13. In 2014, Eat Here opened the Memphis Restaurant and later that year opened the
Birmingham Restaurant. In 2015, Babalu opened the Knoxville Restaurant in the historic JC
Penney building in downtown Knoxville. In July of 2016, Babalu opened a restaurant in the
historic Dilworth neighborhood in Charlotte, North Carolina (the “Charlotte Restaurant”).
In 2017, Babalu opened the Memphis East Restaurant, and then the Atlanta Restaurant in the
heart of Midtown Atlanta. Later in 2017, Babalu opened a location in Chapel Hill, North
Carolina (the “Chapel Hill Restaurant”) and then another in Lexington, Kentucky
(the “Lexington Restaurant”). In 2018, Babalu started, but has not yet completed, construction
on a second metro Atlanta location at Roswell Square, the Roswell Restaurant.
C. Origin Bank Loans to the Debtors
14. Pursuant to that certain Business Loan Agreement dated as of June 14, 2016,
between Eat Here and Origin Bank (the “Business Loan Agreement”), Origin Bank
(“Origin” or ”the “Prepetition Lender”) provided an asset-based loan to Eat Here in the
maximum principal amount of $3 million (the “Business Loan”), which Business Loan is
evidenced by that certain promissory note dated June 14, 2016, made by Eat Here in favor of
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Origin in the original principal amount of $3 million (the “Business Note”), bearing loan number
5002668-10001.
15. Pursuant to that certain Loan Agreement dated as of March 27, 2017, between
Eat Here and Origin, as amended by that certain First Amendment to Loan Agreement dated
May 22, 2017 (as amended, modified, supplemented, or restated, the “Guidance Line Loan
Agreement”), Origin provided a guidance line of credit to Eat Here in the maximum principal
amount of $15 million (the “Loan”), which Loan is evidenced by, among other things: (i) that
certain Promissory Note dated March 27, 2017, bearing loan number 100136-10001 made by
Eat Here in favor of Origin in the original principal amount of $1 million; (ii) that certain
Promissory Note dated March 27, 2017, bearing loan number 100136-10002, made by Eat Here
in favor of Origin in the original principal amount of $1 million; (iii) that certain Promissory
Note dated March 27, 2017, bearing loan number 100136-10003, made by Eat Here in favor
Origin in the original principal amount of $1 million; (iv) that certain Promissory Note dated
July 7, 2017, bearing loan number 100136-10004, made by Eat Here in favor of Origin in the
original principal amount of $1 million; and (v) that certain Promissory Note dated September
18, 2018, bearing loan number 100136-10005, made by Eat Here in favor Origin in the original
principal amount of $1 million (collectively, the “Guidance Line Notes”).
16. Pursuant to that certain Second Amendment to Loan Agreement and Other
Documents dated as of July 16, 2019, between the Debtors and Origin (the “Bridge Loan
Agreement”; together with the Business Loan Agreement and the Guidance Line Loan
Agreement, as such agreements may have been amended or modified from time to time,
the “Loan Agreements”), Origin provided a bridge loan to the Debtors in the amount of $275,000
(the “Bridge Loan”), which Bridge Loan is evidenced by, among other things, that certain
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Promissory Note dated July 16, 2019, made by the Debtors in favor of Origin (the “Bridge Loan
Note”; together with the Business Note and the Guidance Loan Notes, the “Notes”).
17. The Notes are secured by, among other things, (i) that certain Security Agreement
dated as of March 27, 2017, by and between Babalu and Origin, covering substantially all of
Babalu’s personal property located at the Jackson Restaurant (the “Jackson Collateral”); (ii) that
certain Security Agreement dated as of March 27, 2017, by and between Babalu Atlanta #1 and
Origin, covering substantially all of Babalu Atlanta #1’s personal property located at the Atlanta
Restaurant (the “Atlanta Collateral”); (iii) that certain Security Agreement dated as of September
18, 2018, by and between Babalu Atlanta #2 and Origin, covering substantially all of Babalu
Atlanta #2’s personal property located at the Roswell Restaurant (the “Roswell Collateral”);
(iv) that certain Security Agreement dated as of March 27, 2017, by and between Babalu
Memphis #1 and Origin, covering substantially all of Babalu Memphis #1’s personal property
located at the Memphis Restaurant (the “Memphis Collateral”); (v) that certain Security
Agreement dated as of March 27, 2017, by and between Babalu Memphis #2 and Origin,
covering substantially all of Babalu Memphis #2’s personal property located at the
Memphis East Restaurant (the “Memphis East Collateral”); (vi) that certain Security Agreement
dated March 27, 2017, by and between Babalu Knoxville and Origin, covering substantially all
of Babalu Knoxville’s personal property located at the Knoxville Restaurant (the “Knoxville
Collateral”); and (vii) that certain Security Agreement dated March 27, 2017, by and between
Babalu Birmingham and Origin, covering substantially all of Babalu Birmingham’s personal
property located at Birmingham Restaurant (the “Birmingham Collateral”; together with the
Jackson Collateral, the Atlanta Collateral, the Roswell Collateral, the Memphis Collateral, the
Memphis East Collateral, and the Knoxville Collateral, the “Location Collateral”)
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(collectively, each of the Security Agreements identified in this paragraph, together with the
Borrower Security Agreement (as defined below) are hereinafter, the “Security Agreements”;
together with the Loan Agreements, the Notes, and any related loan documents executed
substantially contemporaneously therewith, the “Loan Documents”).
18. The Notes are also secured by Origin’s security interest in substantially all assets
of Eat Here pursuant to the Loan Agreements and (i) that certain Commercial Security
Agreement dated June 14, 2016, by and between Eat Here and Origin, and (ii) that certain
Security Agreement dated March 27, 2017, by and between Eat Here and Origin (collectively,
the “Borrower Security Agreement”), covering substantially all of Eat Here’s personal property
(the “Eat Here Collateral”). Pursuant to the Loan Agreements and the Security Agreements,
the Debtors granted to Origin a security interest in and continuing lien on substantially all of the
Debtors’ assets and the proceeds thereof (the “Pre-Petition Lender’s Liens”). Origin’s security
interest in the Eat Here Collateral and the Location Collateral is evidenced by recorded financing
statements, recorded in Delaware, Georgia, Tennessee, Alabama, and Mississippi
(collectively, the “UCC-1s”). As of the Petition Date, the outstanding balance under the Notes
was approximately of $5.882 million.
D. The Babalu Notes
19. In May of 2015, Eat Here issued $3 million in unsecured notes
(the “Babalu Notes”) through a private placement to 35 investors. All but two of the holders of
the Babalu Notes were already members of Eat Here. The Babalu Notes mature in May of 2020.
As of the Petition Date, the outstanding balance on the Babalu Notes was
approximately $1.6 million.
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E. Trade Creditors
20. In addition to the Debtors’ secured obligations to Origin and Eat Here’s unsecured
obligations to the holders of the Babalu Notes, the Debtors owe approximately $1.4 million to
unsecured trade creditors.
F. Events Leading to Chapter 11 Filings
21. Through year end 2016, in addition to the Jackson Restaurant, Eat Here had
opened four new Babalu branded restaurants: Memphis, Birmingham, Knoxville, and Charlotte
Restaurants. However, in 2016 Eat Here signed multiple leases for new Babalu restaurants, and
in 2017 opened four new restaurants (East Memphis, Atlanta, Chapel Hill, and Lexington
Restaurants), with the last three of those restaurants opening within a four month time-period.
This rapid growth strained Eat Here’s resources and led to increased turnover and inconsistent
operations. As a result, initially strong sales at two of the four new restaurants (the Atlanta and
Lexington Restaurants) declined significantly in the months after opening.
22. In addition to operating difficulties, a failed effort to sell Eat Here diverted senior
management’s attention away from restaurant operations. Further, compounding the weakness
in sales at several of the new restaurants was the fact that development costs at each location
significantly exceeded budget, which were at least partially financed by the Debtors’ rapidly
amortizing Origin loans. Cash flow from the Atlanta, Chapel Hill, and Lexington Restaurants
was significantly below budget, and those locations operated at negative cash flow levels for
much of their operating history. In addition, high levels of employee turnover in the new
restaurants forced Eat Here to pull staff away from existing restaurants, which further
contributed to declining sales and cash flow at those locations.
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23. In early 2018,2 management elected to halt new unit development in response to
the disappointing results at the new restaurants and declining sales at the more established
locations. However, by that time Eat Here and certain newly formed affiliates had already
signed three additional leases in Nashville, Columbus, and a second location in Charlotte.
Efforts to sub-lease those properties proved to be unsuccessful, and Eat Here incurred significant
rent expense without any offsetting revenue. In addition, due to weak revenue, in the Fall of
2018, Eat Here was forced to close the Charlotte Restaurant. Moreover, the Debtors’ Chief
Financial Officer, Tim Walker, resigned on December 7, 2018.
24. Struggling under declining sales and cash flow, lease payments for dark
restaurants and undeveloped locations, and significant debt service obligations, Eat Here
implemented several strategic initiatives in an effort to build sales and reduce operating costs,
including a substantial reduction in corporate overhead. While those measures were initially
successful in improving sales and profitability at several restaurants in early 2019, the rapid pace
of change from several of the strategic initiatives confused customers and sales weakened
beginning in the spring of 2019, which further reduced cash flow. Shortly thereafter, Eat Here
was forced to close the Chapel Hill and Lexington Restaurants. Moreover, the Debtors’
corporate Controller, Candice, Luther, has resigned effective August 1, 2019. Ultimately, the
strain of rent expense at locations with no operating revenue, the loss of portions of their senior
management team, significant debt service obligations, and declining cash flow at existing
2
Although management had decided to curtail expansion in 2018, it became aware of a location near its
corporate headquarters in Roswell, Georgia that had many of the characteristics of Eat Here’s earlier successful
restaurants - it was in a redeveloped area and a historic building. Further, rent was very attractive at this location
and the budgeted investment was relatively low. Consequently, senior management decided to develop the Roswell
Restaurant, and as of the Petition Date, approximately half of the construction costs for this location has been
funded. However, due to the Debtors’ current liquidity issues, construction at the Roswell Restaurant has been
suspended.
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restaurants caused the Debtors to file these Bankruptcy Cases and seek the protection of this
Court under Chapter 11 of the Bankruptcy Code.
Filing of Bankruptcy Cases and First Day Motions
25. On the Petition Date, the Debtors each filed with this Court their voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code. In connection with the Debtors’
Chapter 11 bankruptcy cases, the Debtors have filed or will file the following applications and
motions (collectively, the “First Day Motions”), among others (the “Other Applications”):
1. Application for an Order Directing Joint Administration of Cases Pursuant to Bankruptcy

Rule 1015 (“Application for Joint Administration”)
2. Debtors’ Emergency Motion for an Order to Extend Time to File Schedules and Statements
of Financial Affairs (“Schedules Motions”)
3. Debtors’ Emergency Motion for an Order Establishing Notice and Administrative

Procedures (“Notice Procedures Motion”)
4. Debtors’ Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll Taxes,

Certain Employee Benefits, and Related Expenses, and Other Compensation to Employees
(“Employee Wage Motion”)
5. Debtors’ Emergency Motion for Authority to Continue Pre-Existing Insurance Programs,

and to Pay Pre-Petition Premiums and Related Obligations (“Insurance Motion”)
6. Debtors’ Emergency Motion for Authority to (A) Maintain Existing Bank Accounts, and
(B) Continue Use of Existing Business Forms (“Cash Management Motion”)
7. Debtor’s Emergency Motion For Interim and Final Orders (A) Prohibiting Utilities from
Altering, Refusing, or Discontinuing Service on Account of Prepetition Invoices, (B)
Deeming Utilities Adequately Assured of Future Performance, and (C) Establishing
Procedures for Determining Adequate Assurance of Payment (“Utility Motion”)
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8. Debtor’s Emergency Motion Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364 and 507 for
Interim and Final Orders (A) Authorizing: (1) The Debtors to Obtain Post-Petition
Financing; and (2) Use of Cash Collateral; (B) Granting Liens and Providing Superpriority
Administrative Expense Status; (C) Granting Adequate Protection; (D) Modifying
Automatic Stay; (E) Scheduling a Final Hearing; and (F) Granting Related Relief
(“DIP Motion”)
9. Debtors’ Emergency Motion for an Order Authorizing the Debtors to Pay Pre-Petition Sales,
and Other Taxes and Related Obligations (“Sales Tax Motion”)
10. Application for an Order Appointing Omni Management Group as Claims, Noticing, and
Administrative Agent for the Debtors Pursuant to 28 U.S.C. §156(c) and 11 U.S.C. § 105(a),
Nunc Pro Tunc to the Petition Date (“Omni Application”)
11. Debtors’ Application Pursuant to Section 327(a) of the Bankruptcy Code and Bankruptcy
Rule 2014 for an order Authorizing the Retention and Employment of Schulten Ward Turner
& Weiss LLP as Conflicts Counsel for the Debtors Nunc Pro Tunc to the Petition
(“Schulten Application”)
12. Debtors’ Application Pursuant to Section 321(a) of the Bankruptcy Code and Bankruptcy
Rule 2014 for an Order Authorizing the Retention and Employment of GGG Partners, LLC
as Financial Advisor for Debtors Nunc Pro Tunc to the Petition Date (“GGG Application”)
13. Application Pursuant to Section 327(a) of the Bankruptcy Code and Bankruptcy Rule 2014
for an Order Authorizing the Retention and Employment of Arnall Golden Gregory LLP as
Attorneys for Debtors Nunc Pro Tunc to the Petition Date (“AGG Application”)
1. Application for Joint Administration
26. As set forth above, Eat Here Brands, LLC currently has 75 equity security holders
and is Managed by its Board of Managers. Eat Here Brands, LLC owns 100% of the
membership interests of Babalu Atlanta #1 LLC, Babalu Atlanta #2 LLC, Babalu Knoxville #1
LLC, Babalu Memphis #1 LLC, Babalu Memphis #2 LLC, Babalu, LLC, and Babalu
Birmingham #1 LLC. The Debtors anticipate that numerous notices, applications, motions, other
pleadings, hearings, and orders in these Bankruptcy Cases will affect many or all of the Debtors.
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2. Schedules Motion
27. The Debtors’ Chief Financial Officer, Tim Walker, resigned on
December 7, 2018. Moreover, the Debtors corporate Controller, Candice, Luther, has resigned
effective August 1, 2019. To prepare the Schedules, the Debtors must gather information from
books, records, and documents relating to a multitude of transactions. Consequently, collection
of the necessary information requires the expenditure of substantial time and effort on the part of
the Debtors; limited and already over-burdened employees. The Debtors submit that the efforts
of their employees during the initial stages of these Bankruptcy Cases are critical and need to be
focused on attending to the Debtors’ businesses and maximizing the value of the Debtors’
bankruptcy estates.
3. Notice Procedures Motion
28. Currently, there are over 500 creditors (excluding employees) and parties-in-
interest may be technically entitled to receive notice in these Bankruptcy Cases. To require the
Debtors to provide notice of all pleadings and other papers filed in these Bankruptcy Cases to
these parties-in-interest would be extremely burdensome and costly to the Debtors’ bankruptcy
estates as a result of photocopying and postage expenses as well as other expenses associated
with such large mailings.
4. Employee Wage Motion
29. The Debtors employ approximately 567 people (the “Employees”), of which 36
are employed on a full-time, salaried basis (“Salaried Employees”) and 531 are hourly
employees (“Hourly Employees”). Approximately 122 Hourly Employees were full-time
equivalent employees (“Hourly FTE Employees”) as of the last open-enrollment period in
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November 2018, meaning that, as of the open enrollment period, the Hourly Employee averaged
30 hours per week for the prior six months.
30. The Debtors utilize independent contractors from time to time (collectively,
the “Independent Contractors”). Currently, the Debtors utilizes a single independent contractor
for marketing and graphic-design services. The Independent Contractors receive 1099 forms for
tax purposes, and, accordingly, do not represent a payroll tax burden to the Debtors and are not
entitled to any of the employee benefits discussed in the Employee Wage Motion.
31. The Debtors are seeking authority to pay the wages, additional compensation, and
benefits more fully described below (the “Employee Obligations”) that become payable during
the pendency of these Bankruptcy Cases and to continue at this time its practices, programs, and
policies with respect to their Employees and Independent Contractors, as such practices,
programs, and policies were in effect as of the Petition Date. Even though the Debtors have
incurred certain Employee Obligations prior to the Petition Date, certain of the Employee
Obligations will become due and payable in the ordinary course of the Debtors’ business on and
after the Petition Date. The Employee Obligations include, without limitation: (i) wages, salary,
and other compensation; (ii) payroll taxes; (iii) vacation programs; (iv) expense reimbursement;
(v) auto allowance; and (vi) health and welfare benefits. The Employee Obligations are more
specifically described as follows:
 Wages, salaries, and other compensation. These obligations consist of wages,

salaries, and commissions owed to the Employees (the “Payroll Obligations”).
The Debtors pay their Employees bi-weekly, in arrears. The average Payroll
Obligation is approximately $295,000. In addition to wages paid through payroll,
certain Hourly Employees (bartenders, servers, and servers’ assistants) receive
tips or tipshares in cash at the end of each daily shift (“Tips”), and two of the
Debtors’ Salaried Employees are catering managers and receive commissions in
addition to their salaries. Those commissions are based on catering and banquet
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sales for the preceding four-week fiscal period.3 Mobile-phone and parking
reimbursement, discussed below, are also included in Payroll Obligations. The
gross amount of Payroll Obligations includes certain deductions described
separately below, such as payroll taxes owed by the Employees and/or the
Employer. Additionally, though already paid, Tips are included along with the
Payroll Obligations for the purposes of determining payroll taxes, as discussed
below. As a general rule, Payroll Obligations are deposited directly into the
Employees’ bank accounts, though exceptions are made, in which case payment
will be made by paper check.4 As of the Petition Date, the Debtors owe
approximately $307,000 on account of Payroll Obligations.5
 Independent Contractors. These obligations consist of amounts owed as

compensation to the Independent Contractors. The amount paid by the Debtors to
Independent Contractors for marketing services is $4,000 per four-week fiscal
period. As of the Petition Date, the Debtors owe approximately $0.00 on account
of obligations to the Independent Contractors.
 Payroll taxes. These obligations consist of federal, state, and local income taxes,
social security, and Medicare taxes. The payroll taxes include the amounts owed
by Employees that are withheld from the gross amount of the Employees’ wages
or salary as well as the amounts separately owed by the Debtors. Payroll taxes are
withheld from Employee paychecks and remitted along with the net pay and
employer taxes to the payroll company, Paycor, one business day prior to the pay
date. Paycor either directly deposits or remits a paper check for net pay and
remits all taxes to the respective taxing authorities. In the year preceding the
Petition Date, the Debtors’ average payroll tax liability for Employees ranged
from approximately $92,629.49 to $138.190.28 per fiscal period consisting of
approximately $29,763.66 to $44,078.73 for the Employer obligation and
approximately $62,865.83 to $94,111.55 for Employee obligations, which is
included in the gross amount of the Payroll Obligations discussed above. As of
the Petition Date, the Debtors owe approximately $96,500 on account of
outstanding pre-petition payroll taxes.
 Unemployment taxes. The Debtors also pay certain state and federal
unemployment taxes computed as a percentage of the first $7,000 of an
Employee’s gross wages for federal unemployment taxes and between $7,000 to
14,000 of an Employee’s gross wages (varying by state) for state unemployment
3
The Debtors operate on 13 fiscal periods. Each fiscal period comprises two two-week
pay periods.
4
Approximately 93% of Employees are enrolled in direct deposit.
5
I have deferred all of my $2,500 weekly compensation for serving as CEO of the Debtors
since my retention and, as of the Petition Date, I am owed approximately $27,000. Through the
Employee Wage Motion, the Debtors are seeking authority to pay me $12,850 (the amount of the
priority cap) for my back compensation.
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taxes. Paycor also collects unemployment taxes each pay period and remits the
taxes to the respective tax authorities. The Debtors’ unemployment tax liability
for June 2019 was $6,197.86. As of the Petition Date, the Debtors owe
approximately $2,500 on account of outstanding pre-petition
unemployment taxes.
 Vacation and holiday programs. These obligations consist of time off for vacation
and company holidays. Eat Here Brands, LLC recognizes seven holidays per year.
The other Debtors recognize two (Christmas day and Thanksgiving day). In
addition, full-time salaried employees receive two-weeks’ paid time off, and
Hourly FTE Employee with one-year continuous employment averaging 35 hours
per week for the six months prior to the their anniversary date are eligible for one-
week of paid vacation, with pay calculated at the average of hours worked in the
preceding six-month period.
 Expense Reimbursements. The Debtors reimburse Employees for expenditure of

personal funds on work-related expenses and for mileage in personal vehicles on
work-related trips at the IRS rates approved for reimbursement of travel offsite by
employees. Additionally, Debtors provide certain Salaried Employees a mobile-
phone reimbursement of $75 per pay period and Salaried Employees at Babalu
Knoxville #1 LLC receive a parking reimbursement of $40 per period. As of the
Petition Date, the Debtors owe approximately $2,500 to various Employees and
former Employees on account of reimbursable expenses.
 Auto Allowance. In lieu of mileage reimbursement, the Debtors’ Marketing

Director, IT Manager, Executive Chef, Operations and Training Administrator,
and two Regional Operations Administrators receive an auto-allowance, which
ranges from $100 to $350 per pay period, and totals $1,250 per pay period.
 Health and welfare benefits. The Debtors provide certain Employees with health,
dental, and vision insurance.
o Health Insurance. For Salaried Employees and qualified Hourly FTE

Employees, the Debtors provide health-insurance plans that are
administered by United Healthcare. Currently, there are 47 -participants
in this program. For Hourly FTE Employees, the Debtors pay in-
advance premiums ranging from $321.13 to $674.37 per month
depending on the plan elected, which the Hourly FTE Employees
partially reimburse, ranging from $48.76 to $198.37 per Hourly FTE
Employee per pay period depending on the plan elected and the Hourly
FTE Employee’s hourly wage. For Salaried Employees, the Debtors pay
in-advance premiums ranging from $418.60 to $1,213.94 per month
depending on the plan elected, which the Salaried Employees partially
reimburse, ranging from $38.64 to $251.57 per Salaried Employee per
pay period depending on the plan elected. Total reimbursements for
Hourly FTE and Salary Employees total $5,297.39 per pay period
16
o Dental Insurance. The Debtors provide Salaried Employees a dental-

insurance plan administered by United Healthcare. Currently, there are
27 Salaried Employees participating in this program. The Debtors pay
in-advance the monthly premiums ranging from $13.40 to $42.81 per
Salaried Employees per pay period depending on the plan elected, which
the Salaried Employees totally reimburse through payroll deductions.
o Vision Insurance. The Debtors provide Salaried Employees a vision-

insurance plan administered by United Healthcare. Currently, there are
25 Salaried Employees participating in this program. The Debtors pay in
advance the monthly premiums ranging from $4.01 to $11.41 per
Salaried Employees per pay period depending on the plan elected, which
the Salaried Employees totally reimburse through payroll deductions.
o Combined Premium. The Debtors pay a United Healthcare a combined

premium of $31,016.04 for Health, Dental, and Vision Insurance, of
which the Debtors subsidize $15,544 for Health Insurance premiums, as
discussed above. The next combined premium payment comes due on
August 1, 2019.
32. Any delay in paying Employee Obligations will adversely impact the Debtors’
relationships with their Employees and will irreparably impair the morale, dedication,
confidence, and cooperation of the very people upon whom the Debtors rely in order for their
businesses to be successful. The Debtors must have the support of their Employees in order for
the Debtors’ efforts in these Bankruptcy Cases to succeed. If the relief requested by the
Employee Wage Motion is not granted, the Debtors will likely be out of business altogether.
33. If the Employee Wage Motion is not granted the Debtors’ Employees will suffer
undue hardship and, in many instances, serious financial difficulties, as the amounts in question
are needed to enable certain of the Employees to meet their own personal financial obligations.
The stability of the Debtors will thus be undermined, perhaps irreparably, by the possibility that
otherwise loyal Employees will seek other employment alternatives.
5. Insurance Motion
34. In connection with the operation of their businesses, the Debtors maintain various
insurance policies and programs through several different insurance carriers (the “Insurance
17
Carriers”). All insurance policies (except for policies where the entire premium is paid in
advance) covering the Debtors are listed on Exhibit A to the Insurance Motion, together with a
list of the Insurance Carriers, policy terms, and the premiums due thereunder.
35. The insurance policies and programs covering the Debtors include liability and
property insurance policies, which provide the Debtors with insurance coverage relating to,
among other things, D&O Insurance, General liability, Umbrella, Commercial Property, Crime,
& Auto, and Workers Compensation.
36. As of the Petition Date, the Debtors believe that they are current on their
insurance premiums with respect to the prepetition period. However, to the extent there is an
outstanding insurance policy premium payable by the Debtors that relates (in whole or in part) to
the pre-petition period, the Debtors seek authority to pay these pre-petition premiums in the
ordinary course of business as such payments are necessary to keep their insurance policies and
programs in force.
37. Under the laws of the States where the Debtors operate, including Alabama,
Georgia, Mississippi, and Tennessee, the Debtors are required to maintain workers’
compensation policies and programs to provide their employees with coverage for claims arising
from or related to their employment with the Debtors. Worker’s compensation coverage for the
Debtors employees is covered by a workers compensation insurance policy with Eastern Alliance
Insurance Group and Eat Here (the “Workers’ Compensation Program”). Eat Here’s policy with
Eastern Alliance Insurance Group covers claims for bodily injury of up to $1 million per
accident and claims for disease up to $1 million for each employee. Employees submit claims
directly to Eastern Alliance Insurance Group. Debtors’ premium for this policy is $85,716
approximately $150 per employee per year—which covers a period from November 2018 to
18
November 2019. The Debtors paid 25% of the premium up front and pay monthly premiums in
advance in the amount of $7,143.
38. To the best of my knowledge, as of the Petition Date, there were not any claims
pending against the Debtors under the Workers’ Compensation Program. Accordingly, to the
best of my knowledge, the Debtors are not aware of any deductibles or other amounts owed on
account of the Workers’ Compensation Program.
6. Cash Management Motion
39. The Debtors maintain nine (9) bank accounts (collectively, the “Accounts”) at
Origin Bank (the “Bank”), including: (1) an operating account in the name of Babalu (ending in
5502), (2) an operating account in the name of Babalu Memphis #1 (ending in 3913), (3) an
operating account in the name of Babalu Birmingham #1 (ending in 3925), (4) an operating
account in the name of Babalu Knoxville #1 (ending in 4601), (5) an operating account in the
name of Babalu Atlanta #1, (ending in 9805), (6) an operating account in the name of Babalu
Memphis #2 (ending in 8171), (7) an operating account in the name of Eat Here (ending in 7286)
(collectively, the “Operating Accounts”), (7) a money market account in the name of Eat Here
(ending in 7756) (the “Savings Account”),6 and (9) a payroll account in the name of Eat Here
(ending in 7215) (the “Payroll Account”). Cash revenues7 from each of the restaurant operating
Debtors are deposited into that respective Debtor’s Operating Account. Checks and ACH
payments for alcohol, sales taxes, and vendors are drawn from the Operating Account of each
respective restaurant operating Debtor. At the end of each evening any funds remaining in the
6
Eat Here uses this Account as a savings account. Eat Here does not write checks off of this account, but
occasionally initiates wire transfers from this Account into its Operating Account. This Account currently has a
balance of approximately $3,000.
7
Cash generated from restaurant operations is moved from the Debtors’ restaurants to the Bank through
Loomis (an armored car service). Further, Loomis delivers petty cash to the restaurant operating Debtors based on
their day-to-day cash needs.
19
Operating Accounts of the restaurant operating Debtors are swept into Eat Here’s Operating
Account. Any shortfalls in the Operating Accounts of the restaurant operating Debtors are
funded out of Eat Here’s Operating Account. The Debtors used to fund their respective payrolls
through the Payroll Account, which was funded through Eat Here’s Operating Account. The
Debtors currently fund payroll through Paycor (third party payroll processor), which is funded
out of Eat Here’s Operating Account. The Debtors respectfully request that they be permitted to
maintain the Accounts to avoid any disruption or delay in making and receiving payments.
40. Furthermore, by virtue of the nature and scope of the Debtors’ businesses, and
their employees, suppliers of goods and services, and others with whom the Debtors transact
business, it is important that the Debtors be permitted to continue to use their existing business
forms, including checks. A substantial amount of time and expense would be required to print
new business forms and stationery and being required to obtain new business forms would also
likely result in a substantial risk of disruption to the Debtors’ ordinary business affairs.
7. Utility Motion
41. Utility services are essential to the Debtors’ ability to sustain their operations
while these chapter 11 cases are pending. In the normal conduct of their businesses, the Debtors
have direct relationships with approximately four utility companies (collectively, the “Utility
Companies”) for the provision of electric, water, sewage & garbage, cable, telephone, internet,
and other services (the “Utility Services”). A list identifying the Utility Companies and their
notice addresses is attached to the Utility Motion as Exhibit A (the “Utilities Service List”).
To the best of my knowledge the information contained in Exhibit A of the Utility Motion
is accurate.
20
42. At all relevant times, the Debtors have attempted to remain current with regard to
their utility bills. Furthermore, to the best of the Debtors’ knowledge, the Debtors are current on
all amounts owing to the Utility Companies, other than payment interruptions that may be caused
by the commencement of these chapter 11 cases.
43. Continued and uninterrupted Utility Service is vital to the Debtors’ ability to
sustain their operations during these chapter 11 cases. Because of the nature of the Debtors’
operations, termination or interruption of the Debtors’ utility service would dramatically impair
the Debtors’ ability to conduct business and would cause considerable inconvenience to the
Debtors’ customers and employees. If utility providers are permitted to terminate or disrupt
service to the Debtors, the Debtors’ primary revenue source would be threatened.
8. DIP Motion
44. As of the Petition Date, the Debtors, and certain other non-debtor affiliates owed
Origin approximately $5.882 million, secured by the Pre-Petition Collateral and all or
substantially all of the assets of the non-debtor entities. Approximately $275,000 of the
outstanding amount was the Bridge Loan, which was extended by Origin on an emergency basis
to fund the Debtors’ immediate operating needs prior to filing these Bankruptcy Cases,
including professional fees.
45. The applicable Debtors are currently in default under the provisions of the Pre-
Petition Loan Documents. The Debtors will be unable to operate their businesses in Chapter 11
without access to Origin’s Cash Collateral and access to the proposed DIP Facility. Given the
Debtors’ remaining assets and their capital and debt structure, the Debtors have been unable to
identify an alternative source of funding other than Origin.
21
46. Without adequate post-petition financing, the Debtors will not have sufficient
available sources of working capital to operate their businesses in the ordinary course for a
period of time sufficient to maximize the value of their assets for the benefit of all stakeholders.
The uncertainty concerning the Debtors’ financial condition has curtailed the Debtors’
availability of credit and acceptable credit terms. More specifically, the Debtors’ ability to
finance their operations and administer these Bankruptcy Cases is dependent on their ability to
obtain the funds made available under the DIP Facility and to use the Cash Collateral of Origin.
47. The inability of the Debtors to obtain sufficient liquidity and to make payments
on certain obligations on a timely basis may result in, inter alia, the Debtors’ inability to
continue the operation of their businesses and to pursue a restructuring. If any of these events
were to occur, the impact on the Debtors’ bankruptcy estates could be catastrophic and would
result in material harm to all of the Debtors’ creditors, investors, employees, and other
constituents. In light of the foregoing, the Debtors have determined, in the exercise of their
sound business judgment, that a post-petition credit facility, which permits the Debtors to obtain
up to $1.205 million in financing (which includes the Bridge Loan), and to use such credit to
finance the operation of their businesses as they attempt to reorganize, is critical to their ongoing
operations and stability during their bankruptcy process.
48. The Debtors believe that the debtor in possession financing offered by Origin
presents the best option available to them and would enable the Debtors to preserve their value as
a going concern. The Debtors have engaged in good-faith and extensive, arm’s-length
negotiations with Origin. These negotiations culminated in an agreement by Origin to provide
post-petition financing on the terms and subject to the conditions set forth in the DIP Loan
Agreement and the interim order substantially in the form attached to the DIP Motion as
22
Exhibit B (the “Interim Order”), including the condition that the Bridge Loan be rolled into and
made a part of the DIP Facility.
49. The credit provided under the DIP Facility will enable the Debtors to finance their
business operations, including the ability to operate their businesses in an orderly and reasonable
manner to preserve and enhance the value of their assets and enterprise for the benefit of all
creditors and parties in interest. It is expected that the availability of credit under the
DIP Facility will provide the Debtors with the necessary liquidity to continue their ordinary
course business operations in order to maximize the return available to the Debtors’ creditors in
these Bankruptcy Cases. Finally, I believe that the implementation of the DIP Facility will be
viewed favorably by the Debtors’ employees, vendors, and customers and thereby permit the
Debtors to continue to operate their businesses during the bankruptcy process.
50. Given the Debtors’ remaining assets and their capital and debt structure,
the Debtors are unable to obtain unsecured credit or debt allowable as an administrative expense
in an amount sufficient and readily available to maintain ongoing operations; nor have the
Debtors been able to obtain post-petition financing from an alternative prospective lender on
more favorable terms and conditions than the DIP Facility.
51. The Debtors have been looking for an alternative source of funding to the Pre-
Petition Lender since at least the first quarter of 2019, and have been unable to find alternative or
better financing on the terms and of the type and magnitude required in these Bankruptcy Cases
on an unsecured basis, or without offering terms substantially similar to or worse than those
under the DIP Facility. I believe that the terms and conditions of the DIP Facility are fair and
reasonable, and were negotiated by the parties in good faith and at arm’s length. Based on this,
23
as well as the foregoing factors, I believe that the DIP Facility is the only feasible financing
option for the Debtors and is in the best interests of the Debtors’ respective bankruptcy estates.
52. As described above, after appropriate investigation and analysis and given the
exigencies of the circumstances, the Debtors’ management has concluded that the DIP Facility is
the only alternative available in the circumstances of these Bankruptcy Cases.
53. As with most other large businesses, the Debtors have significant cash needs.
Accordingly, access to substantial credit is necessary to meet the day-to-day costs associated
with financing the operation of the Debtors’ businesses. In the absence of access to cash and
credit, the Debtors may be unable to operate their businesses or to complete the bankruptcy
process. In turn, without the DIP Facility, the Debtors’ prospects for a successful reorganization
will be impractical and the Debtors’ creditors, estates, and other parties in interest will be
materially harmed.
54. Given the Debtors’ constrained liquidity, the DIP Facility is of critical importance
to operating the Debtors’ businesses and preserving the value of the Debtors’ assets, thereby
providing a greater recovery to the Debtors’ creditors than would be realized if the Debtors were
forced to convert their Bankruptcy Cases to chapter 7 cases – which would invariably result in
the closure of the Debtors’ operating businesses and the Pre-Petition Lender exercising its rights
and remedies under applicable non-bankruptcy law. Accordingly, the Debtors submit that the
availability of post-petition credit under the DIP Facility is necessary to preserve and enhance the
value of their bankruptcy estates for the benefit of all stakeholders in these Bankruptcy Cases.
55. The Debtors are also seeking to use Cash Collateral of Origin immediately after
the entry of the Interim Order. The Debtors will use Cash Collateral to the extent necessary to
24
meet their working capital needs and only as set forth in the budget, which is attached to the DIP
Motion as Exhibit C (the “Budget”).
9. Sales Tax Motion
56. The Debtors are seeking authority to pay undisputed pre-petition sales taxes, use,
and other obligations (the “Taxes”) owed to the state and local taxing authorities listed on the
attached Exhibit A of the Sales Tax Motion (collectively, the “Taxing Authorities”) in the
ordinary course of business.
57. In connection with the normal operation of their businesses, the Debtors collect,
among other things, sales and use taxes from their customers and other third parties for
remittance to the Taxing Authorities. As reflected in Exhibit A to the Sales Tax motion, the
Debtors estimate that, as of the Petition Date, they hold approximately $169,000 in collected but
unremitted sales taxes, accrued state use taxes, and accrued state and local liquor use taxes.
58. The Debtors believe that they have sufficient cash reserves and will have
sufficient cash from ongoing operations and the proposed debtor-in-possession credit facility to
pay the amounts described in the Sales Tax Motion in the ordinary course of business.
10. Omni Application
59. I believe that retaining Omni Management Group, Inc. (“Omni”) as the Debtors’
claims and noticing agent is essential to the Debtors’ smooth transition into bankruptcy and the
successful reorganization of the Debtors. The Debtors anticipate that there will be well over 500
creditors and parties in interest in these Bankruptcy Cases. I believe that the number of
anticipated creditors and parties in interest will make it impracticable for the Debtors to serve the
required notices and other papers as part of the required bankruptcy administration in these
Bankruptcy Cases.
25
11. Schulten Application
I believe that retaining Schulten Ward Turner & Weiss, LLP (“SWTW”) as the Debtors’
conflicts counsel is essential to the Debtors’ smooth transition into bankruptcy and the successful
reorganization of the Debtors. To the best of the Debtors’ knowledge, and based on the
Declaration of Robert Mercer attached to the Schulten Application as Exhibit A
(the “Mercer Declaration”), the Debtors understand that SWTW does not hold or represent an
interest adverse to the Debtors or their estates. To the best of the Debtors’ knowledge,
understanding and belief, and based on the Mercer Declaration, the Debtors understand that
SWTW is a disinterested person, and their appointment will be in the best interests of the
Debtors’ estates, creditors, and other parties in interest.
12. GGG Application
I believe that retaining GGG Partners, LLC (“GGG”) as the Debtors’ financial advisor is
essential to the Debtors’ smooth transition into bankruptcy and the successful reorganization of
the Debtors. To the best of the Debtors’ knowledge, and based on the Declaration of Curt
Freiberg attached to the GGG Application as Exhibit A (the “Friedberg Declaration”), the
Debtors understand that GGG does not hold or represent an interest adverse to the Debtors or
their estates. To the best of the Debtors’ knowledge, understanding and belief, and based on the
Friedberg Declaration, the Debtors understand that GGG is a disinterested person, and their
appointment will be in the best interests of the Debtors’ estates, creditors, and other parties
in interest.
13. AGG Application
60. I believe that retaining Arnall Golden Gregory LLP (“AGG”) as the Debtors’
bankruptcy counsel is essential to the Debtors’ smooth transition into bankruptcy and the
26
successful reorganization of the Debtors. To the best of the Debtors’ knowledge, understanding
and belief, and based on the Affidavit of Darryl S. Laddin attached to the AGG Application as
Exhibit A (the “Laddin Affidavit”), the Debtors understand that AGG does not hold or represent
any disqualifying interest adverse to the Debtors or their bankruptcy estates. To the best of the
Debtors’ knowledge, understanding and belief, and based on the Laddin Affidavit, the Debtors
understand that AGG is a disinterested person, and their appointment will be in the best interests
of the Debtors’ estates, creditors, and other parties in interest.
61. I have reviewed each of the First Day Motions and Other Applications and, to the
best of my knowledge, believe the facts set forth therein are true and correct. Such
representation is based upon information and belief, through my review of various materials and
other information, and my experience and knowledge of the Debtors’ operations and financial
condition. If called upon to testify, I could and would, based on the foregoing, testify
competently to the facts set forth in each of the First Day Motions and Other Applications.
62. As a result of my first-hand experience, and through my review of various
materials and other information, discussions with the Debtors’ other executives, and discussions
with the Debtors’ professionals, I have formed opinions as to (a) the necessity of obtaining the
relief sought in the First Day Motions and Other Applications; (b) the importance of the relief
sought in the First Day Motions and Other Applications for the Debtors to continue to operate
effectively; and (c) the negative impact upon the Debtors of not obtaining the relief sought in the
First Day Motions and Other Applications.
63. As described more fully below, the relief sought in the First Day Motions and
Other Applications will minimize the adverse effects of the chapter 11 cases on the Debtors and
ensure that the Debtors’ reorganization effort proceeds as efficiently as possible and results in
27

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Case 19-61688-wlh Doc 5 Filed 07/30/19 Entered 07/30/19 15:15:52 Desc Main

UNITED STATES BANKRUPTCY COURT

DECLARATION OF NED LIDVALL,

States Code (the “Bankruptcy Code”).

2. Based on my first-hand knowledge of the Debtors and their operations as well as

information provided to me by representatives of the Debtors, I make this declaration in support

Debtors with their restructuring efforts.

A. The Debtors’ Corporate Formation and Assets

property rights of the Babalu restaurant concept.

4. Babalu Atlanta #1 LLC is a Georgia limited liability company

Atlanta, Georgia 30309 (the “Atlanta Restaurant”).

5. Babalu Atlanta #2 LLC is a Georgia limited liability company

Square in Roswell, Georgia (the “Roswell Restaurant”).

6. Babalu Knoxville #1, LLC is a Tennessee limited liability company

Street, Knoxville, Tennessee 37902 (the “Knoxville Restaurant”).

7. Babalu Memphis #1, LLC is a Tennessee limited liability company

Madison Avenue, Memphis, Tennessee 38104 (the “Memphis East Restaurant”).

8. Babalu Memphis #2 LLC is a Tennessee limited liability company

Poplar Avenue, Memphis, Tennessee 38119 (the “Memphis East Restaurant”).

9. Babalu, LLC, is a Mississippi limited liability company (“Babalu”), and was

consideration stated in the Contribution Agreement. Accordingly, Babalu’s sole Member is

Mississippi 39216 (the “Jackson Restaurant”).

10. Babalu Birmingham #1, LLC is an Alabama limited liability company

located at 2808 7th Avenue South, Birmingham, Alabama 35233

(the “Birmingham Restaurant”).

B. The Babalu Concept and Restaurant Openings.

Babalu restaurant, the Jackson Restaurant, in Jackson’s historic Fondren neighborhood in a

former elementary school.

historic Dilworth neighborhood in Charlotte, North Carolina (the “Charlotte Restaurant”).

on a second metro Atlanta location at Roswell Square, the Roswell Restaurant.

C. Origin Bank Loans to the Debtors

principal amount of $1 million (collectively, the “Guidance Line Notes”).

substantially contemporaneously therewith, the “Loan Documents”).

statements, recorded in Delaware, Georgia, Tennessee, Alabama, and Mississippi

was approximately of $5.882 million.

D. The Babalu Notes

19. In May of 2015, Eat Here issued $3 million in unsecured notes

approximately $1.6 million.

unsecured trade creditors.

F. Events Leading to Chapter 11 Filings

Lexington Restaurants) declined significantly in the months after opening.

contributed to declining sales and cash flow at those locations.

Financial Officer, Tim Walker, resigned on December 7, 2018.

Court under Chapter 11 of the Bankruptcy Code.

Filing of Bankruptcy Cases and First Day Motions

1. Application for an Order Directing Joint Administration of Cases Pursuant to Bankruptcy

3. Debtors’ Emergency Motion for an Order Establishing Notice and Administrative

4. Debtors’ Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll Taxes,

5. Debtors’ Emergency Motion for Authority to Continue Pre-Existing Insurance Programs,

1. Application for Joint Administration

27. The Debtors’ Chief Financial Officer, Tim Walker, resigned on

books, records, and documents relating to a multitude of transactions. Consequently, collection

3. Notice Procedures Motion

with such large mailings.

4. Employee Wage Motion

employees (“Hourly Employees”). Approximately 122 Hourly Employees were full-time

equivalent employees (“Hourly FTE Employees”) as of the last open-enrollment period in

30 hours per week for the prior six months.

specifically described as follows:

 Wages, salaries, and other compensation. These obligations consist of wages,

 Independent Contractors. These obligations consist of amounts owed as

 Expense Reimbursements. The Debtors reimburse Employees for expenditure of

 Auto Allowance. In lieu of mileage reimbursement, the Debtors’ Marketing