(Reuters) – The court-appointed trustee in charge of recovering money for creditors in the Buffets Holdings Inc bankruptcy case has sued former owners of the company, claiming they “bilked Buffets of hundreds of millions of dollars,” leaving it insolvent.
The trustee, JLL Consultants Inc, claimed in a lawsuit filed last Wednesday that private equity firms Sentinel Capital Partners and Caxton-Iseman Capital received hundreds of millions of dollars in fees and dividends after they bought the dining chain in 2000 in a leveraged deal worth $643 million.
Caxton-Iseman is now known as CI Capital Partners.
Eagan, Minnesota-based Buffets, the largest U.S. steak-buffet restaurant chain, filed for protection from creditors in January 2008. It emerged from bankruptcy last April under new ownership.
The lawsuit said that although Sentinel and Caxton-Iseman lost their ownership in Buffets because of the Chapter 11 filing, the dividends and fees they received over the years far exceeded their original investment.
“We are aware of the complaint. The allegations made in the complaint are frivolous and entirely without merit,” a spokesman for CI Capital Partners said in an email reply.
Sentinel was not immediately available for comment.
The case is In re: JLL Consultants Inc vs Caxton-Iseman Capital Inc et al, U.S. District Court, District of Minnesota No.10-cv-01195. (Reporting by Santosh Nadgir; Editing by Gopakumar Warrier)