Dive Brief:
- SSCP Restaurant Investors, current owner of Corner Bakery Cafe, sued Boston Market owner Jay Pandya earlier this year, alleging breach of fiduciary duties while Pandya owned Corner Bakery. That lawsuit was transferred from a Texas court to federal court earlier this month, court records show.
- The suit alleges Pandya named his then-teenaged son as CEO and president of Corner Bakery Cafe and brought other close family members and associates into the C-suite, including Valentino DiGiorgio, the disgraced ex-chairman of the Pennsylvania Republican Party, who served as general counsel for Corner Bakery and Boston Market.
- “Jay Pandya’s total control and influence over Corner Bakery’s executive functions which had been located in Dallas, Texas enabled him to conceal from Corner Bakery’s creditors that he was bleeding the company dry to benefit himself and his other business ventures,” the lawsuit said.
Dive Insight:
SSCP acquired Corner Bakery’s “causes of action,” when it bought the company out of bankruptcy in June 2023, giving it standing to sue Pandya demanding damages and an accounting of Pandya’s alleged transfers of money out of the brand, per the lawsuit.
Between May 2021 and February 2023, when Corner Bakery sought Chapter 11 bankruptcy protections, more than $23 million were transferred from the brand to Pandya Management, a company controlled by Pandya to provide accounting, finance, operational and record-keeping functions, according to the lawsuit. The total transferred to Pandya Management was far more than Corner Bakery owed to it under the contract between the brand and the firm, according to the suit.
“From as early as October 2020, when Jay Pandya purchased the company, Corner Bakery was insolvent and routinely failed to pay its vendors and employees, yet Jay Pandya continued to siphon off Corner Bakery’s cash, further undermining its ability to survive,” the lawsuit said.
The suit alleges that Pandya ordered Corner Bakery employees not to pay vendors and landlords, which resulted in disruption to the brand’s operations. In particular, the suit alleges that Pandya and Krupa Patel, Corner Bakery’s then treasurer, told employees not to pay rent until landlords commenced eviction proceedings, and that utility firms and landlords multiple times locked employees out of stores over unpaid bills.
The suit also claims that Corner Bakery, under Pandya, transferred more than $10 million to Boston Market.
SSCP has sought to turn the embattled fast casual chain around. Chris Dharod, SSCP president and CEO of Corner Bakery, told Restaurant Dive in a previous interview that the company has managed a significant sales rebound at the chain by focusing on operational basics.
Boston Market, still owned by Pandya, has seen its store count crater and New Jersey state authorities temporarily close all of its stores in the state over unpaid wages. The company also lost an $11.9 million suit brought by vendor US Foods. Pandya, meanwhile, has filed for personal bankruptcy twice, both filings were dismissed.