A long-running family dispute involving the iconic Palm restaurant may soon come to an end.
A global settlement is in the works, with expectations of winning a bankruptcy judge's final approval within a few months.
The agreement would end a tumultuous years-long battle involving four cousins whose grandfathers opened the first upscale Palm restaurant in the 1920s.
The settlement won't keep The Palm in the hands of the families that owned it for decades. It's too late for that.
The families have already lost the storied steakhouse chain in bankruptcy.
In March, Houston-based Landry’s bought The Palm chain for $45 million, adding to its large portfolio of restaurant concepts — which includes everything from the Bubba Gump Shrimp Co. and Morton's to McCormick & Schmick's and Rainforest Cafe.
The purchase came after Caryl Delano, the federal bankruptcy judge, gave up hope of a global settlement in December and gave the green light for a trustee to hire real estate brokers and accountants to pursue a sale of the restaurants and other assets to spur a resolution of the dispute.
Landry's emerged as the highest qualified bidder.
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The bitter family fight shifted from a state court in New York to a federal bankruptcy court in Florida early last year.
That's when Just One More Restaurant Corp., the Naples-based company that owned and licensed the use of the Palm name, trademarks and other intellectual property for the legendary restaurant, filed for Chapter 11 bankruptcy protection in the Middle District of Florida in Fort Myers.
A related company, Just One More Holding Corp., also filed for bankruptcy.
Feeling cheated
The bankruptcy filings followed a state court judge's ruling in Manhattan that sided with Gary Ganzi and Claire Breen, who claimed their cousins had cheated them out of millions of dollars in royalties over many decades, while building a large empire of Palm-branded restaurants for themselves.
After a bench trial in the civil case, Justice Andrea Masley ordered the defendants, Walter Ganzi Jr. and Bruce Bozzi Sr., to pay a roughly $120 million judgment to resolve the dispute, including interest and attorneys' fees.
Ganzi and Bozzi filed an appeal, seeking to stop their cousins from attempting to collect on the multimillion-dollar judgment, but they lost that fight.
Together, Ganzi and Bozzi — the grandsons of the original founders — opened more than 20 Palms around the country and they licensed the rights to use the name, look and feel, logo and other intellectual property to themselves at a flat rate.
The flat rate was set over 40 years ago.
Meanwhile, the cousins — minority shareholders — received a $6,000 licensing fee from every new restaurant, which they argued wasn't nearly enough.
The dueling sides reached a tentative global settlement in October, but it fell apart after Ganzi and Bozzi each filed for Chapter 7 bankruptcy, complicating matters. The sale of their personal assets is underway, which will include their vacation homes.
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Fred Newman, who represents the minority shareholders, said the target date for presenting a new settlement to the bankruptcy judge is June 22. The judge's approval, he said, would "follow later."
"At that hearing, if all things go according to schedule, most of the issues will be resolved, and the bankruptcies will be on track to wind up by the end of the year," Newman said.
The settlement will resolve all of the bankruptcy cases, personal and corporate, he said, finally putting an end to the litigious battle, but the outcome for his clients will be "bittersweet."
"It's the end of a 95-year family enterprise," Newman said. "They are happy that this long ordeal is over."
"They wish Landry's all the best in resurrecting the Palm name," he added.
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Best offer
The debtors' attorneys pushed for a sale of the Palm restaurants and intellectual property, arguing that together they would bring a much higher return on company assets to the benefit of all creditors, which includes Victor Ganzi, Walter's brother, who loaned money to support the expansion of the chain across the United States.
Before the auction Newman estimated the value of The Palm's intellectual property alone at $100 million based on the sale of comparable restaurant properties. However, Landry's offer — the best offer — came in at half that price for all of the assets, along with more than 20 operating restaurants.
"They are a terrific organization," Newman said of the buyer.
According to its website, Landry's owns and operates more than 600 outlets with more than 80 unique brands, including five Golden Nugget Hotel and Casino locations operated by its affiliates. The company is owned by Texas billionaire Tilman Fertitta, who serves as its chief executive.
The surplus money after paying all creditors and taxes will be divided among the majority and minority shareholders and Victor Ganzi, Newman said.
How the money will be divided is still to be determined, he said.
"Hopefully, it will be hammered out soon," Newman said. "Then it will be put into a settlement agreement and then it will be presented to the court jointly."
Judge Delano approved the Palm's sale to Landry's two days before the World Trade Organization declared COVID-19 a pandemic.
If the deal had been scheduled to close any later — after the WTO's pandemic declaration — it probably wouldn't have happened, Newman said, due to the economic chaos caused by the coronavirus, which has hit full-service restaurants particularly hard.
"We got very lucky," he said. "Because no one knows what would have happened."
Miami attorney Paul Singerman, with Berger Singerman LLP, who represents the debtors in the case, agreed.
"I believe that if our hearing to approve the sale — and if the sale closing — had been delayed by even a couple of days it might not have ever closed," he said.
As for the approaching settlement in the dispute involving the original founders' grandchildren, Singerman described it as "pretty big news."
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Odd timing
The sale of The Palm and its assets attracted much attention because the brand is truly iconic, but in the end Landry's was the only one to make a qualifying and timely bid, Singerman said.
"We are very hopeful that this will still be an investment that Landry's does well with," he said. "Landry's has been a very solid trading partner with the debtors."
In late March, Fertitta told the Bloomberg news service that he'd furloughed — or temporarily cut — 40,000 employees across his casino and restaurant operations, or about 70% of his workforce, due to government closures across the United States designed to curb the spread of the coronavirus.
"I don't think Landry's made this decision with the expectation that it was going to have shut down all the stores throughout its entire network after making a substantial investment in The Palm," Singerman said.
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Due to the pandemic, Landry's was forced to close all of The Palm's dining rooms, but they've begun to reopen in the markets where restrictions have eased enough to allow it, said James Hamilton, a senior vice president and chief operating officer for The Palm, via email.
"We have been affected just like all restaurants have been impacted nationwide," he said. "We have had to find ways to still do business throughout the pandemic, such as offering delivery and meal kits to-go options. We look forward to the day when we can operate at 100% again."
After reopening, expect business as usual at The Palm, with some added perks, Hamilton said.
"No changes are planned for The Palm’s 21 locations nationwide," he said. "We will expand the loyalty program by incorporating our popular Landry’s Select Club rewards program where guests can earn reward points when dining at any of our 600 locations nationwide."
Hamilton expects a smooth transition.
"We have a great team of operators and our employees are ready to get back to work," he said.
Opportunity knocks
Asked why Landry's saw The Palm as a good investment, Hamilton said: "The Palm is one of the storied restaurant brands in America, and we were excited for the opportunity to expand and add another great concept to our steakhouse portfolio including Mastro’s, Morton’s and Del Frisco’s, among others."
Landry's only acquired Del Frisco's late last year. At the time, Fertitta told a reporter for Forbes it was a "perfect complement" to the company's existing high-end steakhouse portfolio.
The debtors hired a chief restructuring officer, Fort Myers accountant Gerard McHale, to help them reorganize the financial affairs of the two companies Just One More Restaurant Corp. and Just One More Holding Corp.
McHale, a nationally recognized forensic accountant and bankruptcy trustee, said he'd put the timing of The Palm sale in the category of: "How lucky can you be?" And not just because of when the virus hit the fan.
"The problem we had was we had what you call the melting ice cube," he said. "We had to get that thing closed because we would run out of money if we didn't get that thing sold."
A little history
The Palm restaurant has a rich history that spans many decades.
In 1926 two friends from Parma, Italy, Pio Bozzi and John Ganzi, opened the first Palm restaurant in Manhattan. Together they established Just One More Restaurant Corp.
Just One More Holding Corp. formed in 1946 to own the real estate for the first restaurant location, which later sold.
The second Palm opened in Washington, D.C., in December 1972. The Palm-branded restaurants grew from there.
The steakhouse was in its fourth generation of family ownership before it sold. According to court filings, the enterprise was "directed, controlled and coordinated" out of Naples, where Walter Ganzi Jr. has lived.
The first Palm restaurant became known for the quality of its service and food and, especially, for the caricatures that covered its walls, drawn by local cartoonists who exchanged their artistic talents for meals during the Great Depression.
Through the years, the restaurants have continued to line their walls with caricatures of local celebrities and loyal customers, reflecting their unique communities.
The closest Palm restaurant to Naples is in Miami, which has reopened to diners, under strict health and safety guidelines.
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