Meat House corporate owners face millions in legal claims
The Meat House, a promising New Hampshire startup that grew into a national franchise with 28 locations, appears headed for a change in corporate ownership or bankruptcy as claims of unpaid wages and lawsuits from suppliers, investors and landlords pile up.
The financial problems for the specialty butcher with six locations in New Hampshire and 22 in 10 other states began at least two years ago, when a lawsuit was filed in Rockingham County Superior Court against Meat House Management by American Express Bank, seeking repayment of credit card balances totaling more than $200,000.
On Jan. 22, one of the company's largest investors filed suit. That was followed by another investor lawsuit on Feb. 20, and lawsuits by different landlords on Feb. 14 and Feb. 20.
All told, the company is facing more than $2 million in court claims. The Attorney General's Office is investigating complaints from gift card holders; the state Department of Labor is looking into unpaid wage claims; and a well-known New Hampshire charity that helps members of the military is still owed $40,000 collected by the Meat House at a fundraiser last summer.
The problems appear centered around the corporate-owned Meat House locations in Bedford, Dover, Pembroke, Portsmouth and Stratham in New Hampshire and Scarborough and York in Maine. The only corporate location still in operation is in Dover; it's really not a store, but a Meat House counter in the Fiddlehead Farms Marketplace.
All franchises, including one in Amherst, remain in business under independent ownership.
Meat House co-founders Justin Rosberg, CEO, and Jason Parent, president, have retained two high-profile attorneys. Well-known Manchester bankruptcy lawyer William S. Gannon is handling the creditor issues, while attorney Michael Kushner at Hinckley Allen in Concord is focusing on franchise-related matters.
"We are negotiating and have been negotiating with multiple potential buyers, investors and joint venturers," Gannon said. "Simultaneously we have been negotiating with all the secured creditors and the significant unsecured creditors. Those negotiations in my experience go better conducted privately, although we have been very, very open with all of the parties."
Hoping for a rescue
News of the company's financial problems spread fast after the corporate stores were closed, allegedly for renovation, earlier in the month. Parent told a television reporter at the time that the company had run into financial difficulty but was hoping for an imminent rescue by a new investor.
The lawsuits filed against the company by landlords and investors are rife with references to promises of new investors and payment plans that were agreed to but never executed over the past two years, despite the fact that the corporation collected an average of $126,000 a month in franchise fees during the first seven months of 2013, according to one lawsuit.
Creditors are now trying to attach future franchise payments, along with bank accounts, real estate and other assets of the corporation and its owners. A source close to the negotiations said one of the franchise owners made an offer to purchase the corporation, but that deal fell through. Since then, the source said, some franchise owners have been withholding their franchise fees.
Franchise owners for the time being can only honor gift cards sold at their locations, while the value of gift cards sold from the corporate locations is uncertain.
In addition to court action, the case has attracted the attention of several state offices.
Senior Assistant Attorney General James T. Boffetti, head of the consumer protection bureau, said his office is investigating 10 to 12 complaints regarding gift cards, and is also concerned about allegations that the corporate-owned stores were purchasing meat at nearby grocery stores and selling it as high-priced, custom-cuts.
"We have to look for violations of the Consumer Protection Act, which is our primary charge," he said.
State Commissioner of Labor James W. Craig said his office has received 27 claims for unpaid wages as of Wednesday, and is scheduling them for wage hearings. "Depending on what happens at the hearings, we will take further action to try to get them paid somehow," he said.
Craig W. Bulkley, chief operating officer at the New Hampshire Liquor Commission, confirmed that Meat House Franchising owes the New Hampshire Liquor Commission $9,302 for shipments of wine distributed during the past several weeks.
Charity money in limbo
Chaplain Steven Veinotte of the New Hampshire National Guard is still wondering what happened to the $40,000 the Meat House claims to have raised for the Chaplain's Emergency Relief Fund (CERF), which provides financial assistance to military families in need.
First established in 2004 by the Meat House and Redhook Ale Brewery at the Pease Tradeport, "Operation Thank You" had become a well-regarded way to show appreciation to the men and women in the military, with attendees paying $15 a ticket for food, live music and other attractions. Anyone with a military ID was admitted at no charge.
Veinotte said the event raised substantial amounts in past years, but has never raised $40,000, as claimed on the Meat House website. "That's the highest figure I've ever seen," he said.
Operation Thank You is one example of the community involvement efforts associated with the Meat House since it was founded by Rosberg and Parent in 2003.
The company also hosted a Polar Grill Fest to benefit a new arts center in the Seacoast area, and "Cookouts for a Cause" for local charities.
For the first 10 years of its existence, the company looked like it was destined for long-term success. Entrepreneur Magazine featured it in an article titled, "A Cut Above,' while MSNBC ran a segment titled, "Steaking a Claim on the Retail Meat Market."
For reasons that may be known only to Rosberg and Parent, their corporate operation began to unravel, even as franchise holders claim to enjoy continued financial success.
"It's going to take a little bit of time to sort all this out," said Boffetti, "but we're working on it."