OCEAN CITY – A long-time restaurant has filed for Chapter 11 reorganization this week after a tumultuous start to the year.
Satellite Restaurants Inc. owns and operates the 120th Street Crabcake Factory USA, which turns 25 years old next year.
“Crabcake Factory is an Ocean City icon and we don’t plan on changing a thing in regards to ability to deliver the delicious food and drinks that Ocean City knows and loves. This is a COVID and business issue that requires a reorganization solution. Our quality and service will not be compromised. We are not going anywhere,” said Johnny Brooks, owner and CEO of Crabcake Factory USA since 1996. “Unfortunately recent events relating to COVID-19 and the restrictions placed on restaurants coupled with some long standing wage and tax liabilities have tied our hands going into an uncertain offseason. We want to be proactive protecting the legacy of Crabcake Factory for another 25 years in Ocean City.”
Chapter 11 reorganization allows the business to consolidate its liabilities and protect its assets while developing a long-term business plan. Satellite Restaurants has utilized a new bankruptcy designation know as Chapter 11 Subchapter 5, which is commonly known as a “baby bankruptcy” in accounting and legal circles and designed to expedite a reorganization and swift exit from bankruptcy.
“This designation was not available until recently, generally we didn’t want to have the negative connotations of a bankruptcy attached to such an iconic local location, but on the advice of legal counsel Paul Sweeney of Yumkas Vidmar Sweeney & Mulrenin and our trusted accounting partners we have elected to use the best legal and accounting options available to us,” said Brooks. “This year has been a huge struggle as everyone knows. I owe this to my family, my employees and my loyal customers to alleviate any uncertainty about the future of Crabcake Factory in Ocean City. This allows us to make a manageable plan and move forward.”
The decision only relates to the original 120th Street location. There are two other Crabcake Factory locations both independently owned — Crabcake Factory Bayside in Delaware and Crabcake Factory Poolside on 4th Street in downtown Ocean City.
“This is a whole new world today in the hospitality business, you either adapt and utilize the tools made available to small businesses or you fall by the wayside,” said Brooks. “Crabcake nation is strong and we aren’t going anywhere.”