Sailormen's $130M Debt Drives June Sale of Popeyes Portfolio

Sailormen, Inc., a Miami-based Popeyes Louisiana Kitchen franchisee operating 136 locations in Florida and Georgia, filed for chapter 11 protection on January 15, 2026 in the U.S. Bankruptcy Court for the Southern District of Florida. The First Day Declaration attributed the filing to inflationary cost pressure, labor constraints, higher borrowing costs, and the consequences of a failed 2023 agreement to sell 16 Georgia restaurants to Tar Heels Spice. BMO Bank, N.A., as administrative agent for the senior secured lender group, had filed a receivership complaint in the Southern District of New York on December 8, 2025, and CRO David Baker said avoiding that receivership was a direct reason for the chapter 11 filing.

The case has moved from first-day stabilization through a lender-driven 363 sale process. Judge Robert A. Mark entered a final cash collateral order on March 13, 2026 embedding sale milestones that targeted an auction by June 15 and closing by June 30. The same day, the debtor filed a bidding procedures motion to sell all or substantially all assets free and clear. A dispute with franchisor Popeyes Louisiana Kitchen over unpaid postpetition royalties was resolved through a negotiated payment arrangement in the final order, and Popeyes withdrew its motion on March 16. The court entered five sale orders on June 23, 2026; four buyers closed by July 13, and after RFI Ventures failed to close on the fifth, the debtor sought court approval in July to sell the affected Orlando-region stores to a replacement buyer for $2,672,500, with a hearing set for July 22, 2026.

The restaurant count has already moved inside chapter 11. The debtor obtained authority to reject franchise agreements and leases for 17 closed stores in early March, and the later bidding procedures motion said Sailormen was operating 119 Popeyes restaurants as of March 13, 2026, down from 136 at filing.

Debtor(s)	Sailormen, Inc.
Case Number	26-10451-RAM
Court	U.S. Bankruptcy Court, Southern District of Florida (Miami Division)
Petition Date	January 15, 2026
Judge	Hon. Robert A. Mark
Industry	Restaurant / Quick-Service
Footprint	136 Popeyes locations at filing; ~119 operating as of mid-March 2026
Employees	~3,306 total (34 salaried / 3,272 hourly)
Assets (near petition date)	~$232.5M
Liabilities (near petition date)	~$342.6M
Prepetition Secured Debt	~$129.98M (BMO-led lenders, including principal, interest, and fees)
FY2025 Sales	~$233.5M
FY2025 Net Loss	~$18.8M
Ownership	Interfoods of America, Inc.
Claims Bar Date	March 26, 2026 (governmental: July 14, 2026)

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Distress Triggers and BMO Receivership Action

CRO David Baker attributed the filing in the First Day Declaration to a combination of post-pandemic operating pressure, inflation, higher borrowing costs, labor shortages, and weak unit-level performance. The company had sold 16 restaurants in an attempt to stabilize, but the purchaser subsequently closed the stores and Sailormen remained liable on the lease guarantees.

For fiscal 2025, the debtor reported $233,458,379 in sales and a net operating loss of $18,769,243. Baker said the balance sheet showed approximately $232,501,487 in assets and $342,621,358 in liabilities three days before the petition date. The BMO-led lender group was owed $112,363,525.64 in unpaid principal through November 28, 2025, plus $17,619,113.36 of accrued interest and fees.

BMO filed a receivership complaint in the Southern District of New York on December 8, 2025, and Baker stated that avoiding that receivership was a direct reason for the chapter 11 filing.

Capital Structure and BMO Credit Facility

The final cash collateral order provides the most detailed capital structure picture in the record. The operative credit facility is the Sixth Amended and Restated Credit Agreement dated September 3, 2020, originally between Sailormen and BBVA USA (as administrative agent). BMO Bank N.A. became successor administrative agent through an Agency Transfer Agreement dated September 3, 2021. On March 15, 2024, the parties entered a Seventh Amendment that waived certain events of default.

As of the petition date, the debtor stipulated it owed the lender parties not less than $129,982,639 under the prepetition loan documents, consisting of unpaid principal of $112,363,525.64, accrued interest of $14,571,572.22, plus other accrued and unpaid fees. The prepetition liens covered substantially all of the debtor's assets, including personal property, inventory, accounts receivable, equipment, licenses, contracts, leases, and tax refunds.

The schedules filed on February 12, 2026 added claims detail, including $3,783,276.42 of priority unsecured claims, though the debtor reserved the right to amend.

Cash Collateral and Sale Milestones

Cash collateral orders. The court entered an interim cash collateral order on January 22, 2026, followed by a second interim order on February 24; both authorized use of cash collateral under weekly budgets with a 110% aggregate disbursement cap, adequate protection liens on substantially all assets, and a superpriority administrative claim for the lender parties. On March 13, 2026, Judge Mark entered the final cash collateral order following the March 3 final hearing, overruling the committee's objection to the form of order agreed to by the debtor, lender, and Popeyes and finding that the potential benefits of a further contested hearing were outweighed by the cost, expense, and delay. The order authorized cash collateral use through June 30, 2026.

Budget and variance controls. The final order requires weekly variance reporting and tests actual disbursements against a 110% cap. No variance applies to committee professional fees, debtor professional fees, secured lenders' professional fees, Popeyes payments, or the stub rent reserve. The February 12 updated budget separately itemized $2,367,500 in restructuring-fee escrow, $1,380,000 for secured lenders' professional fees, $475,000 for the investment banker, and $250,000 for trustee fees.

Sale milestones. The final order embeds specific sale milestones as termination events. The milestones in the final order required the debtor to file a bidding procedures motion by March 13 (met on the same day), obtain a bidding procedures order by March 23, conduct an auction by June 15, obtain sale orders by June 19, and close by June 30, 2026. The debtor and lender parties later signed an agreed order extending the outside termination date by 12 days after the auction ran a day past schedule and sale orders were entered June 23 rather than June 19.

Carve-out. The professional fee carve-out in the final order includes a post-event-of-default amount of $250,000 for all debtor and committee professionals combined. The committee was separately authorized to use up to $75,000 of cash collateral to investigate (but not prosecute) possible challenges to the prepetition liens and obligations.

Bidding Procedures and 363 Sale Process

On March 13, 2026, the debtor filed a bidding procedures motion seeking authority to sell all or substantially all assets free and clear of liens, claims, and encumbrances. The court granted a shortened notice period, and on March 20, 2026, Judge Mark entered the bidding procedures order approving the sale process for all or substantially all of the debtor's assets.

Marketing approach. The debtor retained Peak Franchise Capital LLC as investment banker. Peak's marketing strategy includes preparing a teaser document and confidential information memorandum, furnishing a virtual data room, and soliciting both strategic buyers (competitors and adjacent businesses) and financial buyers (private equity and distressed-debt firms). The assets are being marketed as a complete portfolio or as any portion of six regions: Southeast Florida, Central Florida, Northeast Florida, Florida Panhandle, South Alabama, and South Georgia.

Bid protections. The debtor proposed offering stalking horse bidders a break-up fee of 2.5% of the purchase price plus an expense reimbursement of up to $1,000 per store. The form asset purchase agreement attached to the motion serves as the template for potential stalking horse agreements and qualified bids.

Sale timeline and outcome. The court-approved sale timeline set a June 11, 2026 bid deadline and a June 15 auction at the JW Marriott Miami. The auction extended past its scheduled date, and results were announced in a series of successful-bidder notices filed through mid-to-late June, including a notice of successful bidder identifying SBH Foods PLK, LLC as the buyer for a five-store Savannah package for $650,000. On June 23, 2026, Judge Mark entered five sale orders covering the remaining regions: Popeyes Louisiana Kitchen, Inc. for $9,600,000, The Pulse Restaurant Group, LLC for $2,691,889.32, 61 Biscuits, LLC for $1,118,380, and RFI Ventures, LLC for $2,500,000. A notice of closing filed July 13, 2026 confirmed the Popeyes, Pulse, 61 Biscuits, and SBH Foods transactions closed, but RFI Ventures failed to close on its purchase. The debtor then filed an expedited motion to sell the 23-store Orlando region to SBH Foods PLK, LLC for $2,672,500, with a hearing requested for July 22 and closing proposed for July 24, 2026. The consultation parties for the sale process were BMO (as prepetition agent), the creditors' committee, and Popeyes Louisiana Kitchen.

Popeyes Store Closures and Franchise Dispute

First wave of closures. The debtor closed 17 restaurants within the first week of the filing in three waves: 8 stores on January 19, 5 on January 20, and 4 on January 22. The first omnibus lease rejection motion described those stores as unprofitable and said rejecting the related leases would cut annual expenses by more than $1.0 million. The debtor sought to make rejection effective as of the petition date so resulting damages would be treated as unsecured prepetition claims.

Additional closures and rejections. On March 10, the debtor filed a second omnibus lease rejection motion for three additional locations that had closed before the petition date. As of the bidding procedures motion filing on March 13, Sailormen operated 119 Popeyes restaurants, down from 136 at the petition date. The debtor filed a fourth motion to reject additional settlement agreements and leases effective as of the petition date, with a re-notice of hearing filed on March 26, 2026.

Franchise agreement rejections. The court authorized rejection of the franchise agreements for the 17 closed locations on March 9, and authorized rejection of the underlying leases on March 13. On February 25, the debtor had moved to reject the corresponding Popeyes franchise agreements on the same burden-reduction theory used for the leases.

Franchise-obligation dispute and resolution. Popeyes filed an expedited motion on February 17 arguing that the debtor was continuing to operate under the franchise agreements without paying required weekly postpetition royalties and advertising contributions, each equal to 5% of gross sales, for a combined average weekly accrual of about $400,000, and asked the court either to compel immediate payment or grant stay relief so Popeyes could issue default and termination notices. The dispute was resolved through the Popeyes payment arrangement in the final cash collateral order: $5.1 million in 17 weekly payments of $300,000 from March 8 through June 30, a $3 million minimum liquidity balance, and priority payment of Popeyes' cure claims (including deferred obligations) from net sale proceeds at closing, with the lender parties waiving any right to challenge that priority. On March 16, the court denied Popeyes' motion without prejudice after Popeyes agreed to withdraw it.

Professional Retentions and Governance

The debtor retained Shraiberg Page P.A. as general bankruptcy counsel, Cole Schotz P.C. as co-counsel (retention approved March 17), and Stretto, Inc. as claims and noticing agent. Aurora Management Partners, Inc. and David M. Baker serve as CRO, with retention approved March 17. The debtor sought to retain Peak Franchise Capital LLC as investment banker on March 3, with a fee structure consisting of a $25,000 approval fee, $25,000 monthly fee (credited against success fees), and a transaction fee equal to the greater of $600,000 or 3.5% of aggregate consideration.

The official committee of unsecured creditors was appointed on February 12, 2026. The committee retained Lowenstein Sandler LLP as lead counsel (effective February 17) with a 10% discount on partner hourly rates and no billing for travel time, and FTI Consulting, Inc. as financial advisor (effective February 19) to monitor the sale process, liquidity, and cash collateral usage.

BMO Bank N.A. is represented by Berger Singerman LLP. Popeyes Louisiana Kitchen is represented by Venable LLP and Duane Morris LLP.

ERTC Adversary Proceeding

On March 13, 2026, former Sailormen owners Mark Reineri and Jonathan Marmolejos filed an adversary proceeding (Adv. Case No. 26-01090) against Sailormen and BMO seeking a declaratory judgment that Employee Retention Tax Credits for the first three quarters of 2021 are not property of the estate. The plaintiffs, who owned 60% of Interfoods through September 2021, contend that the September 2021 Stock Purchase Agreement allocated the ERTC to the sellers and that BMO consented to that allocation. An emergency motion for preliminary injunction was filed the same day.

The parties settled the dispute. The court approved a settlement on May 21, 2026 under which Reineri and Marmolejos dismissed their complaint with prejudice, Sailormen dismissed its breach-of-release counterclaims with prejudice, and the plaintiffs withdrew their proofs of claim (Nos. 144 and 145) within seven days; each side bore its own fees. The adversary case closed on June 15, 2026.

Key Timeline

December 8, 2025	BMO filed receivership complaint in S.D.N.Y.
January 15, 2026	Chapter 11 petition filed; first-day declaration and motions filed
January 22, 2026	Interim cash collateral order entered
January 26, 2026	First omnibus lease rejection motion filed for 17 closed stores
February 12, 2026	Schedules filed; committee of unsecured creditors appointed
February 17, 2026	Popeyes filed expedited motion over unpaid postpetition franchise obligations
February 24, 2026	Second interim cash collateral order entered
March 3, 2026	Final hearing on cash collateral held; Peak retention application filed
March 9, 2026	Court authorized rejection of franchise agreements for 17 closed stores
March 13, 2026	Final cash collateral order entered; bidding procedures motion filed; adversary proceeding filed (ERTC dispute); lease rejection order entered
March 16, 2026	Court denied Popeyes motion without prejudice; bidding procedures hearing set for March 20
March 17, 2026	Court approved CRO and Cole Schotz retentions
March 20, 2026	Bidding procedures order entered; sale process approved
March 26, 2026	Fourth lease rejection motion re-noticed; sale hearing order entered
May 21, 2026	Court approved settlement of the ERTC adversary proceeding
June 1, 2026	Stalking horse notice deadline
June 11, 2026	Bid deadline
June 15, 2026	Auction held (JW Marriott Miami), extended past schedule; successful-bidder notices filed through mid-to-late June
June 15, 2026	ERTC adversary case closed
June 23, 2026	Judge Mark entered five sale orders for Popeyes, Pulse Restaurant Group, 61 Biscuits, RFI Ventures, and SBH Foods
July 13, 2026	Notice of closing confirmed four of five sales closed; RFI Ventures failed to close
July 17, 2026	Debtor moved to sell the Orlando region to SBH Foods PLK, LLC after the RFI Ventures sale fell through

Frequently Asked Questions

Why did Sailormen file for chapter 11?

The First Day Declaration attributed the filing to rising input costs, labor constraints, higher borrowing costs, and a failed 2023 sale of 16 restaurants that left the company exposed to lease obligations. BMO's December 2025 receivership action was a direct catalyst for seeking court protection.

How many Popeyes locations did Sailormen operate?

The company operated 136 restaurants at filing. After closing 17 stores in the first week and filing a second lease rejection motion for 3 more, the bidding procedures motion reported 119 operating locations as of mid-March 2026. Ownership of the remaining stores transferred to four buyers under sale orders entered June 23, 2026, and the debtor sought court approval in July to sell the Orlando-region stores to SBH Foods PLK, LLC after the original buyer failed to close.

How much debt does Sailormen owe?

The final cash collateral order stipulates the debtor owed the BMO-led lender group not less than $129,982,639 as of the petition date, consisting of $112.36 million in principal plus $14.57 million in accrued interest and fees.

What was the outcome of the sale?

The auction ran the week of June 15, 2026 at the JW Marriott Miami, with results announced in successive successful-bidder notices through mid-to-late June. Judge Mark entered five sale orders on June 23, 2026 to Popeyes Louisiana Kitchen, Inc. ($9,600,000), The Pulse Restaurant Group, LLC ($2,691,889.32), 61 Biscuits, LLC ($1,118,380), SBH Foods PLK, LLC ($650,000 for a Savannah package), and RFI Ventures, LLC ($2,500,000). A notice of closing filed July 13, 2026 confirmed the first four transactions closed; RFI Ventures did not close, and the debtor filed an expedited motion on July 17, 2026 seeking court approval to sell those Orlando-region stores to SBH Foods PLK, LLC for $2,672,500, with a hearing requested for July 22 and closing proposed for July 24, 2026.

Who is the claims agent for Sailormen?

Stretto, Inc. serves as the claims and noticing agent and maintains the official claims register. The notice of creditors' meeting and deadlines set a general proof-of-claim deadline of March 26, 2026, with a governmental deadline of July 14, 2026.

What happened with the Popeyes franchise dispute?

Popeyes filed a motion to compel payment of postpetition royalties and advertising fees averaging about $400,000 per week. The dispute was resolved through the final cash collateral order, which provides Popeyes $5.1 million in weekly payments and priority payment of cure claims from net sale proceeds. Popeyes withdrew its motion and the court denied it without prejudice on March 16.

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