Quality Fresca I, LLC won approval to reject 16 restaurant leases in its Chapter 11 case, advancing the Moe’s Southwest Grill franchisee’s effort to shed burdensome leases. The order, signed August 11 and filed August 12, 2026, makes rejection effective as of the August 4 petition date. It also preserves landlords’ rights to seek administrative expenses for obligations arising between the filing and surrender of the premises. Lease rejection order, lease schedule
The order approves rejection but does not resolve every resulting landlord claim. Quality Fresca entered bankruptcy seeking a reorganization that restores sustainable profitability or a sale, according to chief restructuring officer G. Michael Verdisco. First-day declaration
Exhibit A to the rejection motion lists 16 leases: 14 in Florida, one in Alexandria, Virginia, and one in Brunswick, Georgia. The count comes from the individual premises listed across pages 7–9 of the motion. Quality Fresca described the leases as burdensome and said it had already removed substantially all personal property from the affected locations. Rejection motion and Exhibit A
The court approved abandonment of remaining personal property and authorized landlords to retake the premises and change the locks. It directed the debtor to return possession within ten days of the order if possession had not already been returned. The order itself does not establish when each location was surrendered. Lease rejection order, paragraphs 4–6
Administrative claims remain reserved. Paragraph 8 expressly preserves each landlord’s right to assert administrative expenses for obligations arising from the petition date through surrender, as well as the debtor’s right to oppose those claims. The order therefore does not establish the amount ultimately payable to any landlord. Lease rejection order, paragraph 8
The rejection count should also be kept separate from the operating-store count. Verdisco reported 38 operating restaurants at filing after 19 closures through the end of 2025 and another 12 before bankruptcy. The rejection motion describes restaurants where operations would cease, but neither it nor the declaration reconciles the 16 scheduled leases with the 38 operating locations. Those figures alone do not establish a remaining footprint of 22 restaurants. First-day declaration, paragraphs 13 and 34, rejection motion
The operating business entered bankruptcy with little earnings cushion
Quality Fresca acquired 67 Moe’s restaurants in March 2020 and two more in August 2021. Verdisco attributed its subsequent financial deterioration to declining traffic and revenue, higher food and shipping costs, labor constraints, and rent and debt obligations that did not fall proportionately with sales. These are the debtor’s explanations for its distress. First-day declaration, paragraphs 11–13 and 32–34
Reported measure
Fiscal 2025
2026 through June 15
Net sales / revenue
$58,941,831
$26,382,413
EBITDA
−$111,204
$315,254
Reported Operating Results
Source: First-day declaration, paragraphs 28–31. The declaration labels the 2025 figure consolidated EBITDA and reports 2026 EBITDA separately from store-level EBITDA. The periods differ in length and are not presented as a like-for-like growth comparison.
At filing, Verdisco reported approximately $15.2 million of principal outstanding under the main credit agreement, plus separate $700,000 and $100,000 loans, and approximately $2.1 million in trade payables. GR Loanco 1 LLC, an affiliate of the debtor’s ultimate parent, had acquired the main loan from PNC in May 2026 and provided the additional loans. The secured principal figures exclude accrued interest, fees, and other charges. First-day declaration, paragraphs 22–27
September 16 hearing set on marketing-contract rejection
The cost-reduction effort extends beyond leases. On August 25, Quality Fresca moved to reject its Rewards Network marketing agreement effective as of the petition date. The debtor described a program fee equal to 11% of each qualified transaction and argued that continued performance imposed costs without a commensurate benefit to the estate. That is the debtor’s position in a motion, rather than a court finding. Rewards Network rejection motion
The court’s August 26 notice set that motion, together with an application to retain a leasing consultant, for a September 16, 2026 hearing. September 16 is the noticed hearing date, not an approved rejection date. This account reflects filings available through September 9; the notice does not establish the outcome of the requested contract rejection. Hearing notice
Sources
Lease rejection order /documents/bd6d33ad-0d37-4352-a67c-997af920b964/
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.